Program: Highway Planning and Construction Federal Financial Assistance Listing No.: 20.205 Federal Agency: U.S. Department of Transportation Passed-through: California Department of Transportation Award Number and Year: 5923, 2022/2023 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria:2 CFR 200.331(a) establishes the required elements that the pass-through entity (County) must include in their subrecipient agreements. 2 CFR 200.331(b) establishes the requirement that the pass-through entity must evaluate the risk of noncompliance with Federal statutes, regulations, and terms and conditions of the program for each subaward for the purpose of determining the appropriate subrecipient monitoring activities. 2 CFR 200.331(d) and 2 CFR 200.331(e) establishes the requirement that the pass-through entity must monitor the activities of each subrecipient of program funds to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward and achieves performance goals. 2 CFR 200.331(d) requires that the monitoring activities must include: 1) Reviewing of financial and performance reports as required by the pass-through entity. 2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. 3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 Management decision. 2 CRF 200.331(f) establishes the requirement for the pass-through entity to verify whether the subrecipient is subject to a single audit when the subrecipient’s expenditures are expected to exceed the threshold set forth in 2 CRF 200.501. Condition: In 1 out of 1 instance selected, we found that the subrecipient agreement did not contain the federal award identification elements required to be communicated by the County, no risk assessment was performed, and no subrecipient monitoring was performed. In this same instance, a documented review of whether the subrecipient was subject to a single audit was also not performed. We also found that the subrecipient did not reflect the expenditures of the subaward in its single audit in the period the expenditures were incurred. Cause: The County improperly identified the subrecipient as a contractor. The County did not perform an evaluation of the agreement to determine whether the vendor was a contractor or a subrecipient. Effect: The County did not comply with the subrecipient monitoring compliance requirements. Questioned Costs: None reported. Context/Sampling: We selected 100% of the County’s subrecipients of the program. Repeat Finding from Prior Year(s): No. Recommendation: We recommend that the County establish procedures to determine whether agreements represent a contractor or a subrecipient arrangement. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
U.S. Department of Labor Iowa Workforce Development Federal Financial Assistance Listing 17.258/17.259/17.278 WIOA Cluster Subrecipient Monitoring Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – Iowa Workforce Development did not formally communicate subrecipient monitoring requirements to the County. Consequently, the County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award were not complied with. Questioned Costs – None reported. Context/Sampling – $1,437,054 was passed through to one subrecipient during the year ended June 30, 2023. Repeat Finding from Prior Years – Yes. Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. View of Responsible Officials – This finding is due in part to the fiscal agent agreement with Iowa Workforce Development which does not state that subrecipient monitoring has to be done. Recently, Iowa Workforce Development received a finding from the Department of Labor stating that the fiscal agent agreements improperly place the liability of disallowed costs off on the fiscal agent. This was incorrect, the liability was to stay with the local CEOs. In the wake of the finding, IWD is reissuing the contracts out to the regions to create compliant subrecipient entities within each, and then new fiscal agent agreements will be issued. Additionally, Johnson County will be ending it fiscal agent agreement and no longer continue to be the fiscal agent as of June 30, 2023.
U.S. Department of Labor Iowa Workforce Development Federal Financial Assistance Listing 17.258/17.259/17.278 WIOA Cluster Subrecipient Monitoring Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – Iowa Workforce Development did not formally communicate subrecipient monitoring requirements to the County. Consequently, the County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award were not complied with. Questioned Costs – None reported. Context/Sampling – $1,437,054 was passed through to one subrecipient during the year ended June 30, 2023. Repeat Finding from Prior Years – Yes. Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. View of Responsible Officials – This finding is due in part to the fiscal agent agreement with Iowa Workforce Development which does not state that subrecipient monitoring has to be done. Recently, Iowa Workforce Development received a finding from the Department of Labor stating that the fiscal agent agreements improperly place the liability of disallowed costs off on the fiscal agent. This was incorrect, the liability was to stay with the local CEOs. In the wake of the finding, IWD is reissuing the contracts out to the regions to create compliant subrecipient entities within each, and then new fiscal agent agreements will be issued. Additionally, Johnson County will be ending it fiscal agent agreement and no longer continue to be the fiscal agent as of June 30, 2023.
U.S. Department of Labor Iowa Workforce Development Federal Financial Assistance Listing 17.258/17.259/17.278 WIOA Cluster Subrecipient Monitoring Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – Iowa Workforce Development did not formally communicate subrecipient monitoring requirements to the County. Consequently, the County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award were not complied with. Questioned Costs – None reported. Context/Sampling – $1,437,054 was passed through to one subrecipient during the year ended June 30, 2023. Repeat Finding from Prior Years – Yes. Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. View of Responsible Officials – This finding is due in part to the fiscal agent agreement with Iowa Workforce Development which does not state that subrecipient monitoring has to be done. Recently, Iowa Workforce Development received a finding from the Department of Labor stating that the fiscal agent agreements improperly place the liability of disallowed costs off on the fiscal agent. This was incorrect, the liability was to stay with the local CEOs. In the wake of the finding, IWD is reissuing the contracts out to the regions to create compliant subrecipient entities within each, and then new fiscal agent agreements will be issued. Additionally, Johnson County will be ending it fiscal agent agreement and no longer continue to be the fiscal agent as of June 30, 2023.
U.S. Department of Labor Iowa Workforce Development Federal Financial Assistance Listing 17.258/17.259/17.278 WIOA Cluster Subrecipient Monitoring Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – Iowa Workforce Development did not formally communicate subrecipient monitoring requirements to the County. Consequently, the County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award were not complied with. Questioned Costs – None reported. Context/Sampling – $1,437,054 was passed through to one subrecipient during the year ended June 30, 2023. Repeat Finding from Prior Years – Yes. Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. View of Responsible Officials – This finding is due in part to the fiscal agent agreement with Iowa Workforce Development which does not state that subrecipient monitoring has to be done. Recently, Iowa Workforce Development received a finding from the Department of Labor stating that the fiscal agent agreements improperly place the liability of disallowed costs off on the fiscal agent. This was incorrect, the liability was to stay with the local CEOs. In the wake of the finding, IWD is reissuing the contracts out to the regions to create compliant subrecipient entities within each, and then new fiscal agent agreements will be issued. Additionally, Johnson County will be ending it fiscal agent agreement and no longer continue to be the fiscal agent as of June 30, 2023.
U.S. Department of Labor Iowa Workforce Development Federal Financial Assistance Listing 17.258/17.259/17.278 WIOA Cluster Subrecipient Monitoring Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – Iowa Workforce Development did not formally communicate subrecipient monitoring requirements to the County. Consequently, the County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award were not complied with. Questioned Costs – None reported. Context/Sampling – $1,437,054 was passed through to one subrecipient during the year ended June 30, 2023. Repeat Finding from Prior Years – Yes. Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. View of Responsible Officials – This finding is due in part to the fiscal agent agreement with Iowa Workforce Development which does not state that subrecipient monitoring has to be done. Recently, Iowa Workforce Development received a finding from the Department of Labor stating that the fiscal agent agreements improperly place the liability of disallowed costs off on the fiscal agent. This was incorrect, the liability was to stay with the local CEOs. In the wake of the finding, IWD is reissuing the contracts out to the regions to create compliant subrecipient entities within each, and then new fiscal agent agreements will be issued. Additionally, Johnson County will be ending it fiscal agent agreement and no longer continue to be the fiscal agent as of June 30, 2023.
U.S. Department of Labor Iowa Workforce Development Federal Financial Assistance Listing 17.258/17.259/17.278 WIOA Cluster Subrecipient Monitoring Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – Iowa Workforce Development did not formally communicate subrecipient monitoring requirements to the County. Consequently, the County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award were not complied with. Questioned Costs – None reported. Context/Sampling – $1,437,054 was passed through to one subrecipient during the year ended June 30, 2023. Repeat Finding from Prior Years – Yes. Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. View of Responsible Officials – This finding is due in part to the fiscal agent agreement with Iowa Workforce Development which does not state that subrecipient monitoring has to be done. Recently, Iowa Workforce Development received a finding from the Department of Labor stating that the fiscal agent agreements improperly place the liability of disallowed costs off on the fiscal agent. This was incorrect, the liability was to stay with the local CEOs. In the wake of the finding, IWD is reissuing the contracts out to the regions to create compliant subrecipient entities within each, and then new fiscal agent agreements will be issued. Additionally, Johnson County will be ending it fiscal agent agreement and no longer continue to be the fiscal agent as of June 30, 2023.
U.S. Department of Labor Iowa Workforce Development Federal Financial Assistance Listing 17.258/17.259/17.278 WIOA Cluster Subrecipient Monitoring Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and include requirements to identify the award and applicable requirements to the subrecipient and monitor the activities of the subrecipient. Condition – Iowa Workforce Development did not formally communicate subrecipient monitoring requirements to the County. Consequently, the County did not formally communicate the required information to the subrecipient. No subrecipient agreement was executed. In addition, no monitoring activities were documented. Cause – The County did not have an internal control process in place to ensure subrecipient monitoring requirements were met. Effect – Without the proper communication of applicable requirements and monitoring of the subrecipient, there is a possibility that federal statutes, regulations, and the terms and conditions of the federal award were not complied with. Questioned Costs – None reported. Context/Sampling – $1,437,054 was passed through to one subrecipient during the year ended June 30, 2023. Repeat Finding from Prior Years – Yes. Recommendation – We recommend the County implement a control process which includes the applicable subrecipient monitoring requirements. View of Responsible Officials – This finding is due in part to the fiscal agent agreement with Iowa Workforce Development which does not state that subrecipient monitoring has to be done. Recently, Iowa Workforce Development received a finding from the Department of Labor stating that the fiscal agent agreements improperly place the liability of disallowed costs off on the fiscal agent. This was incorrect, the liability was to stay with the local CEOs. In the wake of the finding, IWD is reissuing the contracts out to the regions to create compliant subrecipient entities within each, and then new fiscal agent agreements will be issued. Additionally, Johnson County will be ending it fiscal agent agreement and no longer continue to be the fiscal agent as of June 30, 2023.
III. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding No. 2022-003 Subrecipient Monitoring U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds – CFDA #21.027 Criterion: Per CFR 200.331 the grantee must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Per CFR 200.303, a non-Federal entity must 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. Condition: The County passed through funding to 48 subrecipients totaling $19,329,471. During calendar year 2022, management did not properly monitor the subrecipients. Specifically, management was unable to provide any documented evidence of a monitoring being performed for 3 of the 48 subrecipients. Cause and Effect: Management lacks a process to ensure that subrecipient files are adequately maintained and the monitoring of subrecipients is occurring during the contract period. Therefore, subrecipients were not properly monitored in accordance with 2 CFR 200.331 nor in accordance with the County’s Subrecipient Monitoring Policy. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that subrecipient files are adequately maintained, subrecipients are effectively monitored during the contract period noted in the contractual agreements as well as the County’s Subrecipient Monitoring Policy.
Federal Agency: U.S. Department of the Treasury Federal Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Fedearl Award Program Year: January 1, 2022 - December 31, 2022 Pass-through Agency: Indiana Finance Authority Pass-through Number: Unknown Type of finding: significant deficiency in internal control over compliance, other matter. Criteria or Specific Requirement - Subrecipient Monitoring: Pursuant to 2 CFR § 200.331, non-Federal entities can award subawards for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. In addition, pursuant to 2 CFR 200.332, the non-Federal entity must identify to the subrecipient as a subaward and includes the Federal award identification. The non-Federal entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Fedderal statutes, regulations, and the terms and conditions of the subaward. Condition: The County could not provide support that it had sufficient review of the subrecipient during the year on a consistent basis. The County had not properly designed or implemented a system of internal controls that would likely be effective in preventing, detecting, and correcting, noncompliance. Question Costs: None Context: It was noted that the file selected for testing did not have documented evidence supporting that the County had sufficient monitoring and communication of the subrecipient. The file selected had a qualified opinion relating to their single audit that the County was wnaware. From a population of ten files, one was selected for testing. Our sample was not intended to be statistically valid. Effec: The County was unable to support that the subrecipients were being monitored. Cause: Failue to maintain sufficient monitoring of the subrecipient. Identification as a repeat finding: No Recommendation: We recommend that the County maintain adequate communication and documentation with the subrecipients to ensure compliance with the subrecipients requirement. This documentation could include a quarterly communication and receipt of the audited financial statements and single audit report, if applicable. Views of responsible officials and planned corrective action: The County is aware of the compliance requirement and has implemented additional procedures, including certain of those identified in the recommendation above, to be able to support subrecipient monitoring processes are in place. Person responsible for implementing: Abby Doyle, Chief Deputy Auditor Anticipated completion date: Completed.
Federal Agency: U.S. Department of the Treasury Federal Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Fedearl Award Program Year: January 1, 2022 - December 31, 2022 Pass-through Agency: Indiana Finance Authority Pass-through Number: Unknown Type of finding: significant deficiency in internal control over compliance, other matter. Criteria or Specific Requirement - Subrecipient Monitoring: Pursuant to 2 CFR § 200.331, non-Federal entities can award subawards for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. In addition, pursuant to 2 CFR 200.332, the non-Federal entity must identify to the subrecipient as a subaward and includes the Federal award identification. The non-Federal entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Fedderal statutes, regulations, and the terms and conditions of the subaward. Condition: The County could not provide support that it had sufficient review of the subrecipient during the year on a consistent basis. The County had not properly designed or implemented a system of internal controls that would likely be effective in preventing, detecting, and correcting, noncompliance. Question Costs: None Context: It was noted that the file selected for testing did not have documented evidence supporting that the County had sufficient monitoring and communication of the subrecipient. The file selected had a qualified opinion relating to their single audit that the County was wnaware. From a population of ten files, one was selected for testing. Our sample was not intended to be statistically valid. Effec: The County was unable to support that the subrecipients were being monitored. Cause: Failue to maintain sufficient monitoring of the subrecipient. Identification as a repeat finding: No Recommendation: We recommend that the County maintain adequate communication and documentation with the subrecipients to ensure compliance with the subrecipients requirement. This documentation could include a quarterly communication and receipt of the audited financial statements and single audit report, if applicable. Views of responsible officials and planned corrective action: The County is aware of the compliance requirement and has implemented additional procedures, including certain of those identified in the recommendation above, to be able to support subrecipient monitoring processes are in place. Person responsible for implementing: Abby Doyle, Chief Deputy Auditor Anticipated completion date: Completed.
2 CFR § 200.331 requires a pass-through entity to clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward by providing the information described in 2 CFR section 200.331(a)(1); (2) all requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award; and (3) any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibilities for the Federal award. During 2022, the Harrison County Department of Job and Family Services (HCDJFS) contracted with a subrecipient to provide services related to its Comprehensive Case Management Employment Program (CCMEP) of the Temporary Assistance for Needy Families (TANF) federal grant. The HCDJFS did not perform necessary monitoring procedures under the Uniform Guidance over this subrecipient. The Harrison County Department of Job and Family Services should review the Uniform Guidance in 2 CFR part 200, which lists its responsibilities as a pass-through entity, establish and maintain its own internal control procedures over compliance with grant requirements, and create a subrecipient monitoring policy to meet the Uniform Guidance audit requirements. The HCDJFS should also document its subrecipient monitoring controls and reviews, and maintain the documentation over the monitoring over its subrecipient.
Finding 2022-001: Subrecipient Risk Assessment Federal Program: ALN 59.077 Criteria or Specific Requirement: As stated in 2 CFR 200.331 part (b), 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 purposes of determining the appropriate subrecipient monitoring procedures to prescribe to each individual subrecipient. Condition: The Organization did not document the pre-award risk assessment process on its subrecipients that detailed monitoring procedures based on the assessed level of risk. While we noted that the Institute performed an internal pre-award review of all sub-awardees UG audits, and the institute performed monitoring procedures, those procedures were not linked to the initial risk assessment as detailed in a formal policy. Cause: The Organization does not have a formal subaward policy that details the risk assessment process for potential subrecipients. Effect or Potential Effect: The Organization could inadvertently engage in relationships with subrecipients of higher risk without the appropriate level of oversight (i.e. monitoring) to ensure subrecipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: None noted. Context: The Organization did not document the pre-award risk assessment procedures. Our audit work in this area consisted of substantive testwork over a sample of subrecipient expenditures that were selected based on a defined threshold. We consider our sample to be representative of the populations, and thus, is a statistically valid sample. The issue is deemed to be systemic. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the Organization establish subaward policy and ensure the risk assessment procedures over its subrecipients are performed and documented prior to engagement. Based on these risk assessments, the Organization should assign a risk level to each, and then determine the monitoring tools to apply based on these risk levels.
FINDING 2022-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $13,177,707. During the audit period, the County provided subawards of SLFRF funds to other entities. As a pass-through entity, the County must: 1. Identify the award and the applicable requirements to each subrecipient. 2. Evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Subawards, totaling $2,503,400, were provided to four different entities. Three of the subrecipient agreements associated with the subawards were selected for testing. For the three agreements tested, the following information was incomplete or missing: 1. The subrecipients unique entity identifier. 2. The federal award identification number (FAIN). 3. The federal award date of award to the recipient by the federal agency. 4. The name of the federal awarding agency, pass-through entity (auditee), and contact information for awarding official of the pass-through entity (auditee). 5. The Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement. Furthermore, the County did not have an evaluation of the subrecipients' risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. See definition for Subaward in ? 200.1 of this part. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ? 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (iii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with ? 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determined the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the County was not properly designed, nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The County was responsible for providing a subaward agreement, with all required elements, and monitoring the non-profit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-001: Sub-recipients Federal Programs: Assistance Listing Number 19.124 Criteria: As noted in 2 CFR 200.331 part (d): Monitor the activities of the sub-recipient as necessary to ensure that the sub-award is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions for the sub-award; and that sub-award performance goals are achieved. Condition: During our audit, we noted that the Center does not have updated policies and procedures in place for monitoring sub-recipients to be in compliance with 2 CFR 200.331. We also noted the pre-award risk assessment procedures were not properly documented. Lastly, we noted the Center did not perform the FFATA (Federal Funding Accountability and Transparency Act) reporting requirements. Cause: The Center does not have updated policies and procedures in place to be in compliance with monitoring activities of their sub-recipients. Our audit procedures consisted of substantive testwork over a sample of sub-recipient expenditures that were selected based on a threshold. We consider our sample to representative of the population. Effect or Potential Effect: The Center could inadvertently engage in relationships with sub-recipients of higher risk without the appropriate level of oversight (monitoring) to ensure sub-recipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: None noted. Context: The Center failed to properly document its due diligence with respect to risk assessment procedures and FFATA reporting requirements. Identification as a Repeat Finding, if Applicable: N/A Recommendation: As a result, we concluded that certain enhancements would add value to the Center?s due diligence with respect to its monitoring processes, and the following are our recommendations (of activities/documents that should be performed/maintained by the Center: Enhance pre-award risk assessment; an evaluation and assignment of level of the financial (and programmatic) risk associated with the intended recipient/grantee for the purpose of determining the expected level of oversight and monitoring during the period of performance. Enhance documentation of evidence of an evaluation process with respect to the identification of the prospective recipient. A regularly documented review process with respect to periodic financial reports received from grantees. An evaluation of the need for a periodic site visit. Receipt of the grantee?s annual audit reports, if available (to ensure there are no weaknesses or deficiencies in internal control during the grant period). If there are deficiencies that directly affect the program, then a corrective action plan be established. The Center will need to evaluate the FFATA reporting requirements and comply with the act.
Criteria or Specific Requirements: Using the guidance in 2 CFR section 200.331, non-Federal entities passing federal awards through to other entities are required to perform a determination as to whether the other entities are considered to be subrecipients or contractors. Under 2 CFR 200.332, pass-through entities are required to ensure that subawards to subrecipients include required federal award identification and detail of all compliance and other requirements for the federal award. In addition, the subrecipients to ensure that the subaward is used for authorized purposes, that compliance requirements are met, and that the subrecipient takes timely and appropriate action on any deficiencies relating to the Federal award provided. Condition: During testing over subrecipients monitoring and reporting, we noted the County did not have effective control over subrecipient monitoring and reporting. Questioned costs: None. Context: For 5 of 5 subrecipients selected, the County did not have agreements with the subrecipients that included the required federal award information and did not have a process in place to monitor these subrecipients. Prior to 2022, the County determined that certain entities receiving payment under TANF were contractors. In March of 2023, the County performed a revised analysis using the guidance in 2 CFR 200.331 with the conclusion that certain entities that were previously determined to be contractors should have been considered subrecipients. After this revised determination was made, the County did not provide revised subaward agreements or perform subrecipients monitoring procedures. Cause: The County initially improperly determined TANF subrecipients as contractors prior to 2022 and did not follow up timely after a revised determination was completed in 2023. The County did not have a process in place to properly assess if organizations met the criteria to be considered subrecipients. Effect: If the County does not provide required subaward information on a timely basis, it increases the risk that subrecipients will not be in compliance with all required federal award requirements. Repeat Finding: Not a repeat finding. Recommendation: We recommend the County determine whether an entity receiving payment under TANF is a subrecipient or a contractor prior to entering into an agreement with the entity and to include all guidance under 2 CFR 200.331 when making this determination. Views of responsible officials: There is no disagreement with the audit findings.
Criteria or specific requirement: Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient?s DUNS number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (CFDA) number and name, identification of whether the award is R&D and indirect cost rate for federal award. Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a)(1), pass-through entities must evaluate each subrecipient?s risk of noncompliance to determine the appropriate level of monitoring of the subrecipient. Per 2 CFR 200.332(d) through (f), pass-through entities must monitor the activities of the subrecipient, which includes reviewing financial reports required by the pass-through entity. Condition: During our testing, we noted subrecipients tested had required information omitted from the sub agreements to the subrecipients including Assistance Listing (CFDA) title and number, subrecipient?s DUNS number, Federal Award Identification Number (FAIN), identification of whether the award is research and development, and indirect cost rate for federal award. Subrecipients tested did not have evidence of the County?s evaluation of the risk of noncompliance by the subrecipients, nor was there evidence of monitoring of annual audits for the subrecipients. Internal checklists that aid in compliance were missing for certain subrecipients. A subrecipient was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Questioned costs: None. Context: Five out of the five subrecipients did not include required information in subaward agreements issued to subrecipients and lacked evidence of both the evaluation of risk of noncompliance of the subrecipient and monitoring of annual audits for the subrecipients. Two of the five subrecipients were missing an internal checklist that is signed by the County Manager. One of the five subrecipients was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Cause: Lack of sufficient controls in place to ensure that subrecipient agreements contain all required information and are monitored appropriately. Effect: Failure to communicate required information and to adequately monitor the subrecipients could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: No. Recommendation: We recommend that the County review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding and that appropriate monitoring is performed for each subrecipient. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient?s DUNS number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (CFDA) number and name, identification of whether the award is R&D and indirect cost rate for federal award. Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a)(1), pass-through entities must evaluate each subrecipient?s risk of noncompliance to determine the appropriate level of monitoring of the subrecipient. Per 2 CFR 200.332(d) through (f), pass-through entities must monitor the activities of the subrecipient, which includes reviewing financial reports required by the pass-through entity. Condition: During our testing, we noted subrecipients tested had required information omitted from the sub agreements to the subrecipients including Assistance Listing (CFDA) title and number, subrecipient?s DUNS number, Federal Award Identification Number (FAIN), identification of whether the award is research and development, and indirect cost rate for federal award. Subrecipients tested did not have evidence of the County?s evaluation of the risk of noncompliance by the subrecipients, nor was there evidence of monitoring of annual audits for the subrecipients. Internal checklists that aid in compliance were missing for certain subrecipients. A subrecipient was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Questioned costs: None. Context: Five out of the five subrecipients did not include required information in subaward agreements issued to subrecipients and lacked evidence of both the evaluation of risk of noncompliance of the subrecipient and monitoring of annual audits for the subrecipients. Two of the five subrecipients were missing an internal checklist that is signed by the County Manager. One of the five subrecipients was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Cause: Lack of sufficient controls in place to ensure that subrecipient agreements contain all required information and are monitored appropriately. Effect: Failure to communicate required information and to adequately monitor the subrecipients could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: No. Recommendation: We recommend that the County review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding and that appropriate monitoring is performed for each subrecipient. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient?s DUNS number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (CFDA) number and name, identification of whether the award is R&D and indirect cost rate for federal award. Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a)(1), pass-through entities must evaluate each subrecipient?s risk of noncompliance to determine the appropriate level of monitoring of the subrecipient. Per 2 CFR 200.332(d) through (f), pass-through entities must monitor the activities of the subrecipient, which includes reviewing financial reports required by the pass-through entity. Condition: During our testing, we noted subrecipients tested had required information omitted from the sub agreements to the subrecipients including Assistance Listing (CFDA) title and number, subrecipient?s DUNS number, Federal Award Identification Number (FAIN), identification of whether the award is research and development, and indirect cost rate for federal award. Subrecipients tested did not have evidence of the County?s evaluation of the risk of noncompliance by the subrecipients, nor was there evidence of monitoring of annual audits for the subrecipients. Internal checklists that aid in compliance were missing for certain subrecipients. A subrecipient was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Questioned costs: None. Context: Five out of the five subrecipients did not include required information in subaward agreements issued to subrecipients and lacked evidence of both the evaluation of risk of noncompliance of the subrecipient and monitoring of annual audits for the subrecipients. Two of the five subrecipients were missing an internal checklist that is signed by the County Manager. One of the five subrecipients was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Cause: Lack of sufficient controls in place to ensure that subrecipient agreements contain all required information and are monitored appropriately. Effect: Failure to communicate required information and to adequately monitor the subrecipients could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: No. Recommendation: We recommend that the County review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding and that appropriate monitoring is performed for each subrecipient. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2022-004: Internal Controls over Compliance and Other Matters M. Subrecipient Monitoring U.S. DEPARTMENT OF JUSTICE Children Exposed to Violence ? Assistance Listing No. 16.818 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES COVID-19 ? Community Services Block Grant? Assistance Listing No. 93.569 Criteria: The Uniform Guidance requires program participants who are pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.331(d) through (f)). All pass-through entities must also ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following specific required information: federal award identification information, all requirements imposed by the pass-through entity, any additional requirements to meet the pass-through entity?s responsibilities, information on the indirect cost rate, requirements to permit access to subrecipients? records and statements, and appropriate closeout terms and conditions (2 CFR section 200.332). Condition: The U.S. Department of Justice?s (DOJ) EDPR of Youthprise?s Children Exposed to Violence Program (re. 2020-CV-FX-K007) noted compliance issues over Youthprise?s subrecipient monitoring. Deficiencies included the budget, risk assessments, determination of suitability, lobbying forms, and missing documentation as it related to its subrecipient grants. A formal letter was issued to Youthprise dated November 8, 2022, detailing the compliance issues noted. In addition, the subgrant agreements awarded for the COVID-19 ? Community Services Block Grant program did not include the required information per 2 CFR section 200.332. Cause: Internal controls were not in place to ensure Youthprise followed the subrecipient monitoring requirements outlined in 2 CFR section 200.331 and 200.332. Effect: The conditions noted above resulted in noncompliance over subrecipient monitoring by Youthprise. Context: The DOJ completed a EDPR of Youthprise?s Children Exposed to Violence Program (re. 2020-CV-FX-K007) during 2022. The DOJ outlined specific recommendations in its EPDR letter dated November 22, 2022 to address the conditions noted above and requested resolution to the conditions noted in its EPDR within 20 calendar days. DOJ completed a follow-up site visit at Youthprise on July 10, 2023 and determined all compliance issues to have been adequately resolved. The original agreement from Community Action Partnership of Hennepin County for the COVID-19 ? Community Services Block Grant program did not specify that Youthprise was considered a subrecipient of these federal funds, nor did it contain the required information under 2 CFR section 200.332. Youthprise originally considered themselves a contractor under the agreement and therefore the required subaward information per 2 CFR section 200.332 was not included in the subgrant agreements. Subsequently, it was verified with the pass-through entity that Youthprise is considered a subrecipient for this program. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Youthprise review procedures to ensure adequate subrecipient monitoring is being performed over all subrecipient agreements, that meet the requirements of 2 CFR 200.331 and 2 CFR 200.332. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and is in the process of developing internal controls to ensure timely and appropriate actions are made on the deficiency noted. Additional details can be found in Youthprise?s Corrective Action Plan.
Finding 2022-004: Internal Controls over Compliance and Other Matters M. Subrecipient Monitoring U.S. DEPARTMENT OF JUSTICE Children Exposed to Violence ? Assistance Listing No. 16.818 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES COVID-19 ? Community Services Block Grant? Assistance Listing No. 93.569 Criteria: The Uniform Guidance requires program participants who are pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.331(d) through (f)). All pass-through entities must also ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following specific required information: federal award identification information, all requirements imposed by the pass-through entity, any additional requirements to meet the pass-through entity?s responsibilities, information on the indirect cost rate, requirements to permit access to subrecipients? records and statements, and appropriate closeout terms and conditions (2 CFR section 200.332). Condition: The U.S. Department of Justice?s (DOJ) EDPR of Youthprise?s Children Exposed to Violence Program (re. 2020-CV-FX-K007) noted compliance issues over Youthprise?s subrecipient monitoring. Deficiencies included the budget, risk assessments, determination of suitability, lobbying forms, and missing documentation as it related to its subrecipient grants. A formal letter was issued to Youthprise dated November 8, 2022, detailing the compliance issues noted. In addition, the subgrant agreements awarded for the COVID-19 ? Community Services Block Grant program did not include the required information per 2 CFR section 200.332. Cause: Internal controls were not in place to ensure Youthprise followed the subrecipient monitoring requirements outlined in 2 CFR section 200.331 and 200.332. Effect: The conditions noted above resulted in noncompliance over subrecipient monitoring by Youthprise. Context: The DOJ completed a EDPR of Youthprise?s Children Exposed to Violence Program (re. 2020-CV-FX-K007) during 2022. The DOJ outlined specific recommendations in its EPDR letter dated November 22, 2022 to address the conditions noted above and requested resolution to the conditions noted in its EPDR within 20 calendar days. DOJ completed a follow-up site visit at Youthprise on July 10, 2023 and determined all compliance issues to have been adequately resolved. The original agreement from Community Action Partnership of Hennepin County for the COVID-19 ? Community Services Block Grant program did not specify that Youthprise was considered a subrecipient of these federal funds, nor did it contain the required information under 2 CFR section 200.332. Youthprise originally considered themselves a contractor under the agreement and therefore the required subaward information per 2 CFR section 200.332 was not included in the subgrant agreements. Subsequently, it was verified with the pass-through entity that Youthprise is considered a subrecipient for this program. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Youthprise review procedures to ensure adequate subrecipient monitoring is being performed over all subrecipient agreements, that meet the requirements of 2 CFR 200.331 and 2 CFR 200.332. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and is in the process of developing internal controls to ensure timely and appropriate actions are made on the deficiency noted. Additional details can be found in Youthprise?s Corrective Action Plan.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number or Year (or Other Identifying Number): CY2021 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The City received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $18,042,360. The City enlisted a non-profit, Heart City Health Center, Inc., to assist with public health information and paid them $50,000. The payment was made under the Responding to Public Health and Economic Impacts of COVID-19 eligible use category. Documentation to support the payment included an invoice from the Heart City Health Center, Inc., Board of Works Resolution 21-R-19, and Ordinance 5861. The Board of Works approved Resolution 21-R-19 on December 28, 2021. The resolution states in part, "Heart City Health Center is a separate legal entity from the City of Elkhart and as a separate legal entity, requires the formation of a subrecipient agreement to transfer funds from the City's ARPA Coronavirus State and Local Fiscal Recovery Funds allocation to Heart City Health . . . now, therefore be it resolved, the Board of Public Works approves Heart City Health Center Inc. as a subrecipient of fifty thousand dollars in ARPA state and local fiscal recovery funds, and authorizes the Department of Law to prepare an appropriates subrecipient agreement for execution by the Board of Works and Heart City Health Center Inc. for the purposes approved herein . . ." The City provided SLFRF award funds to the Heart City Health Center, Inc. to carry out a program on the City's behalf, making the Heart City Health Center, Inc. a subrecipient of the City, as noted in their resolution, and, therefore, subject to subrecipient monitoring. The City was unable provide a copy of the subaward agreement or other supporting documentation to show evaluation of the subrecipient's risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states in part: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. . . . Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non- Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and . . ." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ? 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with ? 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the passthrough entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the City was not properly designed nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City was responsible for providing a subaward agreement and monitoring the nonprofit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2022-002 Finding – Federal Award Type: Subrecipient Monitoring –Material Non-Compliance and Weakness in Internal Control Over Compliance. Identification of Federal Program: Research and Development Cluster: AL Number: 81.086 Conservation Research and Development Program Criteria / Requirement: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2CFR§200.331, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, all requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients. Condition / Context: Forth passed through $75,170 in funding to subrecipients under Assistance Listing 81.086. During our audit, we noted that Forth did not have documented written procedures or controls in place to ensure compliance with the U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) subrecipient monitoring requirements. Per review of subaward contracts, required federal contract information was not clearly identified. Further, subrecipients were not evaluated for risk of non-compliance, were not monitored, and there were no procedures in place to ensure the accountability of for-profit subrecipients. Cause: Procedures are not in place to ensure that Forth is providing adequate subaward
2022-004 Subrecipient Monitoring Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Effort Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: 2022 and 2021 Pass-through Entity: n/a Questioned Costs: None Type of Finding: Material Weakness in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: The requirements for subrecipient monitoring for the subaward are contained in 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); federal awarding agency regulations; and the terms and conditions of the award. The County must do the following: (1) Review the pass-through entity (PTE’s) subrecipient monitoring policies and procedures to gain an understanding of the PTE’s process to identify subawards, evaluate risk of noncompliance, and perform monitoring procedures based upon identified risks. (2) Review subaward documents including the terms and conditions of the subaward to ascertain if, at the time of subaward (or subsequent subaward modification), the PTE made the subrecipient aware of the award information required by 2 CFR section 200.331(a) sufficient for the PTE to comply with federal statutes, regulations, and the terms and conditions of the award. (3) Review the PTE’s documentation of monitoring the subaward and consider if the PTE’s monitoring provided reasonable assurance that the subrecipient used the subaward for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. (4) Ascertain if the PTE verified that subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, met this requirement (2 CFR section 200.331(f)). This verification may be performed as part of the required monitoring under 2 CFR section 200.331(d)(2) to ensure that the subrecipient takes timely and appropriate action on deficiencies detected though audits. Condition: During our testing, it was noted the County did not have adequate controls designed to ensure that subrecipient monitoring requirements were being met. Context: Of the 3 subrecipients tested, all 3 did not included signed, formal agreements between the County and subrecipients. Cause: The County has not designed and implemented internal controls to ensure compliance with subrecipient monitoring requirements. Effect: The County was not communicating the required information to subrecipients through a formal agreement. Recommendation: We recommend the County implement internal control(s) to ensure that required subrecipient monitoring through formal agreements is completed. Repeat Finding: No Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Program: Assistance Listing #14.228, Community Development Block Grant, U.S. Department of Housing and Urban Development, Passed through the Pennsylvania Department of Community and Economic Development, Pass-Through Entity Identifying Numbers: C000066177, C000067301, C000070907, C000073805, C000076178, C000075471 and C000062142 Assistance Listing #21.023, Emergency Rental Assistance Program, U.S. Department of Treasury, Passed through the Pennsylvania Department of Human Services, Pass-Through Entity Identifying Number: N/A Prior Year Finding Number 2021-004 Criteria: The requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), §200.331 Requirements for Pass-through Entities, requires entities who pass federal funding through to subrecipients evaluate each subrecipient's risk of noncompliance. As detailed in 2 CFR sections 200.331(d) through (f), the Uniform Guidance requires pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient, as detailed in 2 CFR section 200.521. Condition: As part of our follow-up on previous audit findings, it was noted that the County is not performing monitoring activities over its subrecipient in compliance with the Uniform Guidance. Additionally, it was noted that the County did not issue a management decision for an audit finding pertaining to the Federal award provided to the subrecipient in a prior year. Questioned Costs: N/A Cause: The County does not have in place sufficient monitoring activities for its subrecipient, representing a significant deficiency in internal control over compliance. Effect: The County is not in compliance with certain requirements of the Uniform Guidance. Context: Title IV-E funding is passed through to the Lycoming-Clinton Mental Health and Intellectual Disabilities Joinder Board. The governing body of the Joinder consists of the Board of Commissioners of Lycoming and Clinton Counties, which allow each County 50% control. While it has been determined that the County has risk assessment and subrecipient monitoring policies and procedures in place for its pass-through entities related to other federal programs, management at the County has taken the position that the Title IV-E program is being monitored because of the unique nature of the funding being passed through to the Joinder Board. Recommendation: We recommend that County management perform monitoring activities for the Title IV-E program similar to the policies and procedures it has in place for its other pass-through activities. Views of Responsible Officials and Planned Corrective Actions: Management understands and is working to provide better oversight and monitoring of entities that receive pass-through grant dollars. See corrective action plan.
Federal Program: Assistance Listing #14.228, Community Development Block Grant, U.S. Department of Housing and Urban Development, Passed through the Pennsylvania Department of Community and Economic Development, Pass-Through Entity Identifying Numbers: C000066177, C000067301, C000070907, C000073805, C000076178, C000075471 and C000062142 Assistance Listing #21.023, Emergency Rental Assistance Program, U.S. Department of Treasury, Passed through the Pennsylvania Department of Human Services, Pass-Through Entity Identifying Number: N/A Prior Year Finding Number 2021-004 Criteria: The requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), §200.331 Requirements for Pass-through Entities, requires entities who pass federal funding through to subrecipients evaluate each subrecipient's risk of noncompliance. As detailed in 2 CFR sections 200.331(d) through (f), the Uniform Guidance requires pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient, as detailed in 2 CFR section 200.521. Condition: As part of our follow-up on previous audit findings, it was noted that the County is not performing monitoring activities over its subrecipient in compliance with the Uniform Guidance. Additionally, it was noted that the County did not issue a management decision for an audit finding pertaining to the Federal award provided to the subrecipient in a prior year. Questioned Costs: N/A Cause: The County does not have in place sufficient monitoring activities for its subrecipient, representing a significant deficiency in internal control over compliance. Effect: The County is not in compliance with certain requirements of the Uniform Guidance. Context: Title IV-E funding is passed through to the Lycoming-Clinton Mental Health and Intellectual Disabilities Joinder Board. The governing body of the Joinder consists of the Board of Commissioners of Lycoming and Clinton Counties, which allow each County 50% control. While it has been determined that the County has risk assessment and subrecipient monitoring policies and procedures in place for its pass-through entities related to other federal programs, management at the County has taken the position that the Title IV-E program is being monitored because of the unique nature of the funding being passed through to the Joinder Board. Recommendation: We recommend that County management perform monitoring activities for the Title IV-E program similar to the policies and procedures it has in place for its other pass-through activities. Views of Responsible Officials and Planned Corrective Actions: Management understands and is working to provide better oversight and monitoring of entities that receive pass-through grant dollars. See corrective action plan.
SOME FEDERAL AWARDS MAY CONTAIN COST LIMITATIONS ON RECOVERY OF INDIRECT COSTS THAT DIFFER FROM THE FEDERALLY NEGOTIATED INDIRECT COST RATES. IN THESE CASES, THE INDIRECT COST RATE WILL BE SPECIFIED IN THE AWARD, AD DESCRIBED IN 2 CFR SECTIONS 200.210(A)(15) AND 200.331(A)(1)(XIII). NONPROFIT ORGANIZATIONS MUST CONFORM TO COST PRINCIPLES IN 2 CFR PART 200, SUBPART E, APPENDIX IV, AND CAS (IF APPLICABLE), AND IN ACCORDANCE WITH ANY NEGOTIATED RATE AGREEMENTS AND SPECIFIC AWARD CONDITIONS/LIMITATIONS. ADDITIONALLY, RATES USED MUST BE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AWARD AND THE AMOUNTS CLAIMED MUST BE APPLIED TO THE APPROPRIATE BASE. IDAHO IMMUNIZATION COALITION, INC. WAS UNABLE TO PROVIDE DOCUMENTATION OF AN APPROPRIATE BASE OF EXPENDITURES FOR THE AWARD APPROVED RATE WAS APPLIED TO.
III. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding No. 2022-003 Subrecipient Monitoring U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds – CFDA #21.027 Criterion: Per CFR 200.331 the grantee must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Per CFR 200.303, a non-Federal entity must 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. Condition: The County passed through funding to 48 subrecipients totaling $19,329,471. During calendar year 2022, management did not properly monitor the subrecipients. Specifically, management was unable to provide any documented evidence of a monitoring being performed for 3 of the 48 subrecipients. Cause and Effect: Management lacks a process to ensure that subrecipient files are adequately maintained and the monitoring of subrecipients is occurring during the contract period. Therefore, subrecipients were not properly monitored in accordance with 2 CFR 200.331 nor in accordance with the County’s Subrecipient Monitoring Policy. Questioned Cost: None Recommendation: We recommend that management enhance the design of its control activities to ensure that subrecipient files are adequately maintained, subrecipients are effectively monitored during the contract period noted in the contractual agreements as well as the County’s Subrecipient Monitoring Policy.
Federal Agency: U.S. Department of the Treasury Federal Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Fedearl Award Program Year: January 1, 2022 - December 31, 2022 Pass-through Agency: Indiana Finance Authority Pass-through Number: Unknown Type of finding: significant deficiency in internal control over compliance, other matter. Criteria or Specific Requirement - Subrecipient Monitoring: Pursuant to 2 CFR § 200.331, non-Federal entities can award subawards for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. In addition, pursuant to 2 CFR 200.332, the non-Federal entity must identify to the subrecipient as a subaward and includes the Federal award identification. The non-Federal entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Fedderal statutes, regulations, and the terms and conditions of the subaward. Condition: The County could not provide support that it had sufficient review of the subrecipient during the year on a consistent basis. The County had not properly designed or implemented a system of internal controls that would likely be effective in preventing, detecting, and correcting, noncompliance. Question Costs: None Context: It was noted that the file selected for testing did not have documented evidence supporting that the County had sufficient monitoring and communication of the subrecipient. The file selected had a qualified opinion relating to their single audit that the County was wnaware. From a population of ten files, one was selected for testing. Our sample was not intended to be statistically valid. Effec: The County was unable to support that the subrecipients were being monitored. Cause: Failue to maintain sufficient monitoring of the subrecipient. Identification as a repeat finding: No Recommendation: We recommend that the County maintain adequate communication and documentation with the subrecipients to ensure compliance with the subrecipients requirement. This documentation could include a quarterly communication and receipt of the audited financial statements and single audit report, if applicable. Views of responsible officials and planned corrective action: The County is aware of the compliance requirement and has implemented additional procedures, including certain of those identified in the recommendation above, to be able to support subrecipient monitoring processes are in place. Person responsible for implementing: Abby Doyle, Chief Deputy Auditor Anticipated completion date: Completed.
Federal Agency: U.S. Department of the Treasury Federal Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Fedearl Award Program Year: January 1, 2022 - December 31, 2022 Pass-through Agency: Indiana Finance Authority Pass-through Number: Unknown Type of finding: significant deficiency in internal control over compliance, other matter. Criteria or Specific Requirement - Subrecipient Monitoring: Pursuant to 2 CFR § 200.331, non-Federal entities can award subawards for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. In addition, pursuant to 2 CFR 200.332, the non-Federal entity must identify to the subrecipient as a subaward and includes the Federal award identification. The non-Federal entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Fedderal statutes, regulations, and the terms and conditions of the subaward. Condition: The County could not provide support that it had sufficient review of the subrecipient during the year on a consistent basis. The County had not properly designed or implemented a system of internal controls that would likely be effective in preventing, detecting, and correcting, noncompliance. Question Costs: None Context: It was noted that the file selected for testing did not have documented evidence supporting that the County had sufficient monitoring and communication of the subrecipient. The file selected had a qualified opinion relating to their single audit that the County was wnaware. From a population of ten files, one was selected for testing. Our sample was not intended to be statistically valid. Effec: The County was unable to support that the subrecipients were being monitored. Cause: Failue to maintain sufficient monitoring of the subrecipient. Identification as a repeat finding: No Recommendation: We recommend that the County maintain adequate communication and documentation with the subrecipients to ensure compliance with the subrecipients requirement. This documentation could include a quarterly communication and receipt of the audited financial statements and single audit report, if applicable. Views of responsible officials and planned corrective action: The County is aware of the compliance requirement and has implemented additional procedures, including certain of those identified in the recommendation above, to be able to support subrecipient monitoring processes are in place. Person responsible for implementing: Abby Doyle, Chief Deputy Auditor Anticipated completion date: Completed.
2 CFR § 200.331 requires a pass-through entity to clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward by providing the information described in 2 CFR section 200.331(a)(1); (2) all requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award; and (3) any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibilities for the Federal award. During 2022, the Harrison County Department of Job and Family Services (HCDJFS) contracted with a subrecipient to provide services related to its Comprehensive Case Management Employment Program (CCMEP) of the Temporary Assistance for Needy Families (TANF) federal grant. The HCDJFS did not perform necessary monitoring procedures under the Uniform Guidance over this subrecipient. The Harrison County Department of Job and Family Services should review the Uniform Guidance in 2 CFR part 200, which lists its responsibilities as a pass-through entity, establish and maintain its own internal control procedures over compliance with grant requirements, and create a subrecipient monitoring policy to meet the Uniform Guidance audit requirements. The HCDJFS should also document its subrecipient monitoring controls and reviews, and maintain the documentation over the monitoring over its subrecipient.
Finding 2022-001: Subrecipient Risk Assessment Federal Program: ALN 59.077 Criteria or Specific Requirement: As stated in 2 CFR 200.331 part (b), 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 purposes of determining the appropriate subrecipient monitoring procedures to prescribe to each individual subrecipient. Condition: The Organization did not document the pre-award risk assessment process on its subrecipients that detailed monitoring procedures based on the assessed level of risk. While we noted that the Institute performed an internal pre-award review of all sub-awardees UG audits, and the institute performed monitoring procedures, those procedures were not linked to the initial risk assessment as detailed in a formal policy. Cause: The Organization does not have a formal subaward policy that details the risk assessment process for potential subrecipients. Effect or Potential Effect: The Organization could inadvertently engage in relationships with subrecipients of higher risk without the appropriate level of oversight (i.e. monitoring) to ensure subrecipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: None noted. Context: The Organization did not document the pre-award risk assessment procedures. Our audit work in this area consisted of substantive testwork over a sample of subrecipient expenditures that were selected based on a defined threshold. We consider our sample to be representative of the populations, and thus, is a statistically valid sample. The issue is deemed to be systemic. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the Organization establish subaward policy and ensure the risk assessment procedures over its subrecipients are performed and documented prior to engagement. Based on these risk assessments, the Organization should assign a risk level to each, and then determine the monitoring tools to apply based on these risk levels.
FINDING 2022-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $13,177,707. During the audit period, the County provided subawards of SLFRF funds to other entities. As a pass-through entity, the County must: 1. Identify the award and the applicable requirements to each subrecipient. 2. Evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Subawards, totaling $2,503,400, were provided to four different entities. Three of the subrecipient agreements associated with the subawards were selected for testing. For the three agreements tested, the following information was incomplete or missing: 1. The subrecipients unique entity identifier. 2. The federal award identification number (FAIN). 3. The federal award date of award to the recipient by the federal agency. 4. The name of the federal awarding agency, pass-through entity (auditee), and contact information for awarding official of the pass-through entity (auditee). 5. The Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement. Furthermore, the County did not have an evaluation of the subrecipients' risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. See definition for Subaward in ? 200.1 of this part. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ? 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (iii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with ? 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determined the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the County was not properly designed, nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The County was responsible for providing a subaward agreement, with all required elements, and monitoring the non-profit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-001: Sub-recipients Federal Programs: Assistance Listing Number 19.124 Criteria: As noted in 2 CFR 200.331 part (d): Monitor the activities of the sub-recipient as necessary to ensure that the sub-award is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions for the sub-award; and that sub-award performance goals are achieved. Condition: During our audit, we noted that the Center does not have updated policies and procedures in place for monitoring sub-recipients to be in compliance with 2 CFR 200.331. We also noted the pre-award risk assessment procedures were not properly documented. Lastly, we noted the Center did not perform the FFATA (Federal Funding Accountability and Transparency Act) reporting requirements. Cause: The Center does not have updated policies and procedures in place to be in compliance with monitoring activities of their sub-recipients. Our audit procedures consisted of substantive testwork over a sample of sub-recipient expenditures that were selected based on a threshold. We consider our sample to representative of the population. Effect or Potential Effect: The Center could inadvertently engage in relationships with sub-recipients of higher risk without the appropriate level of oversight (monitoring) to ensure sub-recipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: None noted. Context: The Center failed to properly document its due diligence with respect to risk assessment procedures and FFATA reporting requirements. Identification as a Repeat Finding, if Applicable: N/A Recommendation: As a result, we concluded that certain enhancements would add value to the Center?s due diligence with respect to its monitoring processes, and the following are our recommendations (of activities/documents that should be performed/maintained by the Center: Enhance pre-award risk assessment; an evaluation and assignment of level of the financial (and programmatic) risk associated with the intended recipient/grantee for the purpose of determining the expected level of oversight and monitoring during the period of performance. Enhance documentation of evidence of an evaluation process with respect to the identification of the prospective recipient. A regularly documented review process with respect to periodic financial reports received from grantees. An evaluation of the need for a periodic site visit. Receipt of the grantee?s annual audit reports, if available (to ensure there are no weaknesses or deficiencies in internal control during the grant period). If there are deficiencies that directly affect the program, then a corrective action plan be established. The Center will need to evaluate the FFATA reporting requirements and comply with the act.
Criteria or Specific Requirements: Using the guidance in 2 CFR section 200.331, non-Federal entities passing federal awards through to other entities are required to perform a determination as to whether the other entities are considered to be subrecipients or contractors. Under 2 CFR 200.332, pass-through entities are required to ensure that subawards to subrecipients include required federal award identification and detail of all compliance and other requirements for the federal award. In addition, the subrecipients to ensure that the subaward is used for authorized purposes, that compliance requirements are met, and that the subrecipient takes timely and appropriate action on any deficiencies relating to the Federal award provided. Condition: During testing over subrecipients monitoring and reporting, we noted the County did not have effective control over subrecipient monitoring and reporting. Questioned costs: None. Context: For 5 of 5 subrecipients selected, the County did not have agreements with the subrecipients that included the required federal award information and did not have a process in place to monitor these subrecipients. Prior to 2022, the County determined that certain entities receiving payment under TANF were contractors. In March of 2023, the County performed a revised analysis using the guidance in 2 CFR 200.331 with the conclusion that certain entities that were previously determined to be contractors should have been considered subrecipients. After this revised determination was made, the County did not provide revised subaward agreements or perform subrecipients monitoring procedures. Cause: The County initially improperly determined TANF subrecipients as contractors prior to 2022 and did not follow up timely after a revised determination was completed in 2023. The County did not have a process in place to properly assess if organizations met the criteria to be considered subrecipients. Effect: If the County does not provide required subaward information on a timely basis, it increases the risk that subrecipients will not be in compliance with all required federal award requirements. Repeat Finding: Not a repeat finding. Recommendation: We recommend the County determine whether an entity receiving payment under TANF is a subrecipient or a contractor prior to entering into an agreement with the entity and to include all guidance under 2 CFR 200.331 when making this determination. Views of responsible officials: There is no disagreement with the audit findings.
Criteria or specific requirement: Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient?s DUNS number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (CFDA) number and name, identification of whether the award is R&D and indirect cost rate for federal award. Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a)(1), pass-through entities must evaluate each subrecipient?s risk of noncompliance to determine the appropriate level of monitoring of the subrecipient. Per 2 CFR 200.332(d) through (f), pass-through entities must monitor the activities of the subrecipient, which includes reviewing financial reports required by the pass-through entity. Condition: During our testing, we noted subrecipients tested had required information omitted from the sub agreements to the subrecipients including Assistance Listing (CFDA) title and number, subrecipient?s DUNS number, Federal Award Identification Number (FAIN), identification of whether the award is research and development, and indirect cost rate for federal award. Subrecipients tested did not have evidence of the County?s evaluation of the risk of noncompliance by the subrecipients, nor was there evidence of monitoring of annual audits for the subrecipients. Internal checklists that aid in compliance were missing for certain subrecipients. A subrecipient was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Questioned costs: None. Context: Five out of the five subrecipients did not include required information in subaward agreements issued to subrecipients and lacked evidence of both the evaluation of risk of noncompliance of the subrecipient and monitoring of annual audits for the subrecipients. Two of the five subrecipients were missing an internal checklist that is signed by the County Manager. One of the five subrecipients was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Cause: Lack of sufficient controls in place to ensure that subrecipient agreements contain all required information and are monitored appropriately. Effect: Failure to communicate required information and to adequately monitor the subrecipients could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: No. Recommendation: We recommend that the County review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding and that appropriate monitoring is performed for each subrecipient. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient?s DUNS number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (CFDA) number and name, identification of whether the award is R&D and indirect cost rate for federal award. Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a)(1), pass-through entities must evaluate each subrecipient?s risk of noncompliance to determine the appropriate level of monitoring of the subrecipient. Per 2 CFR 200.332(d) through (f), pass-through entities must monitor the activities of the subrecipient, which includes reviewing financial reports required by the pass-through entity. Condition: During our testing, we noted subrecipients tested had required information omitted from the sub agreements to the subrecipients including Assistance Listing (CFDA) title and number, subrecipient?s DUNS number, Federal Award Identification Number (FAIN), identification of whether the award is research and development, and indirect cost rate for federal award. Subrecipients tested did not have evidence of the County?s evaluation of the risk of noncompliance by the subrecipients, nor was there evidence of monitoring of annual audits for the subrecipients. Internal checklists that aid in compliance were missing for certain subrecipients. A subrecipient was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Questioned costs: None. Context: Five out of the five subrecipients did not include required information in subaward agreements issued to subrecipients and lacked evidence of both the evaluation of risk of noncompliance of the subrecipient and monitoring of annual audits for the subrecipients. Two of the five subrecipients were missing an internal checklist that is signed by the County Manager. One of the five subrecipients was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Cause: Lack of sufficient controls in place to ensure that subrecipient agreements contain all required information and are monitored appropriately. Effect: Failure to communicate required information and to adequately monitor the subrecipients could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: No. Recommendation: We recommend that the County review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding and that appropriate monitoring is performed for each subrecipient. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes, federal award identification, subrecipient name, subrecipient?s DUNS number, federal award identification number (FAIN), federal award date, subaward start and end date, amount of federal funds obligated, total amount of federal award, federal award project description, name of federal awarding agency, Assistance Listing (CFDA) number and name, identification of whether the award is R&D and indirect cost rate for federal award. Per 2 CFR 200.303, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control should include procedures to ensure required information is communicated prior to the issuance of the subaward. Per 2 CFR 200.331(a)(1), pass-through entities must evaluate each subrecipient?s risk of noncompliance to determine the appropriate level of monitoring of the subrecipient. Per 2 CFR 200.332(d) through (f), pass-through entities must monitor the activities of the subrecipient, which includes reviewing financial reports required by the pass-through entity. Condition: During our testing, we noted subrecipients tested had required information omitted from the sub agreements to the subrecipients including Assistance Listing (CFDA) title and number, subrecipient?s DUNS number, Federal Award Identification Number (FAIN), identification of whether the award is research and development, and indirect cost rate for federal award. Subrecipients tested did not have evidence of the County?s evaluation of the risk of noncompliance by the subrecipients, nor was there evidence of monitoring of annual audits for the subrecipients. Internal checklists that aid in compliance were missing for certain subrecipients. A subrecipient was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Questioned costs: None. Context: Five out of the five subrecipients did not include required information in subaward agreements issued to subrecipients and lacked evidence of both the evaluation of risk of noncompliance of the subrecipient and monitoring of annual audits for the subrecipients. Two of the five subrecipients were missing an internal checklist that is signed by the County Manager. One of the five subrecipients was provided the funding at the beginning of the grant award period and no required quarterly reports were submitted to the County subsequent to funding. Cause: Lack of sufficient controls in place to ensure that subrecipient agreements contain all required information and are monitored appropriately. Effect: Failure to communicate required information and to adequately monitor the subrecipients could result in subrecipients not properly administering the federal programs in accordance with federal regulations. Repeat Finding: No. Recommendation: We recommend that the County review its procedures for communicating information to subrecipients and implement the procedures necessary to ensure information is included in the subrecipient award documents at time of funding and that appropriate monitoring is performed for each subrecipient. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2022-004: Internal Controls over Compliance and Other Matters M. Subrecipient Monitoring U.S. DEPARTMENT OF JUSTICE Children Exposed to Violence ? Assistance Listing No. 16.818 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES COVID-19 ? Community Services Block Grant? Assistance Listing No. 93.569 Criteria: The Uniform Guidance requires program participants who are pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.331(d) through (f)). All pass-through entities must also ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following specific required information: federal award identification information, all requirements imposed by the pass-through entity, any additional requirements to meet the pass-through entity?s responsibilities, information on the indirect cost rate, requirements to permit access to subrecipients? records and statements, and appropriate closeout terms and conditions (2 CFR section 200.332). Condition: The U.S. Department of Justice?s (DOJ) EDPR of Youthprise?s Children Exposed to Violence Program (re. 2020-CV-FX-K007) noted compliance issues over Youthprise?s subrecipient monitoring. Deficiencies included the budget, risk assessments, determination of suitability, lobbying forms, and missing documentation as it related to its subrecipient grants. A formal letter was issued to Youthprise dated November 8, 2022, detailing the compliance issues noted. In addition, the subgrant agreements awarded for the COVID-19 ? Community Services Block Grant program did not include the required information per 2 CFR section 200.332. Cause: Internal controls were not in place to ensure Youthprise followed the subrecipient monitoring requirements outlined in 2 CFR section 200.331 and 200.332. Effect: The conditions noted above resulted in noncompliance over subrecipient monitoring by Youthprise. Context: The DOJ completed a EDPR of Youthprise?s Children Exposed to Violence Program (re. 2020-CV-FX-K007) during 2022. The DOJ outlined specific recommendations in its EPDR letter dated November 22, 2022 to address the conditions noted above and requested resolution to the conditions noted in its EPDR within 20 calendar days. DOJ completed a follow-up site visit at Youthprise on July 10, 2023 and determined all compliance issues to have been adequately resolved. The original agreement from Community Action Partnership of Hennepin County for the COVID-19 ? Community Services Block Grant program did not specify that Youthprise was considered a subrecipient of these federal funds, nor did it contain the required information under 2 CFR section 200.332. Youthprise originally considered themselves a contractor under the agreement and therefore the required subaward information per 2 CFR section 200.332 was not included in the subgrant agreements. Subsequently, it was verified with the pass-through entity that Youthprise is considered a subrecipient for this program. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Youthprise review procedures to ensure adequate subrecipient monitoring is being performed over all subrecipient agreements, that meet the requirements of 2 CFR 200.331 and 2 CFR 200.332. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and is in the process of developing internal controls to ensure timely and appropriate actions are made on the deficiency noted. Additional details can be found in Youthprise?s Corrective Action Plan.
Finding 2022-004: Internal Controls over Compliance and Other Matters M. Subrecipient Monitoring U.S. DEPARTMENT OF JUSTICE Children Exposed to Violence ? Assistance Listing No. 16.818 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES COVID-19 ? Community Services Block Grant? Assistance Listing No. 93.569 Criteria: The Uniform Guidance requires program participants who are pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.331(d) through (f)). All pass-through entities must also ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following specific required information: federal award identification information, all requirements imposed by the pass-through entity, any additional requirements to meet the pass-through entity?s responsibilities, information on the indirect cost rate, requirements to permit access to subrecipients? records and statements, and appropriate closeout terms and conditions (2 CFR section 200.332). Condition: The U.S. Department of Justice?s (DOJ) EDPR of Youthprise?s Children Exposed to Violence Program (re. 2020-CV-FX-K007) noted compliance issues over Youthprise?s subrecipient monitoring. Deficiencies included the budget, risk assessments, determination of suitability, lobbying forms, and missing documentation as it related to its subrecipient grants. A formal letter was issued to Youthprise dated November 8, 2022, detailing the compliance issues noted. In addition, the subgrant agreements awarded for the COVID-19 ? Community Services Block Grant program did not include the required information per 2 CFR section 200.332. Cause: Internal controls were not in place to ensure Youthprise followed the subrecipient monitoring requirements outlined in 2 CFR section 200.331 and 200.332. Effect: The conditions noted above resulted in noncompliance over subrecipient monitoring by Youthprise. Context: The DOJ completed a EDPR of Youthprise?s Children Exposed to Violence Program (re. 2020-CV-FX-K007) during 2022. The DOJ outlined specific recommendations in its EPDR letter dated November 22, 2022 to address the conditions noted above and requested resolution to the conditions noted in its EPDR within 20 calendar days. DOJ completed a follow-up site visit at Youthprise on July 10, 2023 and determined all compliance issues to have been adequately resolved. The original agreement from Community Action Partnership of Hennepin County for the COVID-19 ? Community Services Block Grant program did not specify that Youthprise was considered a subrecipient of these federal funds, nor did it contain the required information under 2 CFR section 200.332. Youthprise originally considered themselves a contractor under the agreement and therefore the required subaward information per 2 CFR section 200.332 was not included in the subgrant agreements. Subsequently, it was verified with the pass-through entity that Youthprise is considered a subrecipient for this program. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that Youthprise review procedures to ensure adequate subrecipient monitoring is being performed over all subrecipient agreements, that meet the requirements of 2 CFR 200.331 and 2 CFR 200.332. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and is in the process of developing internal controls to ensure timely and appropriate actions are made on the deficiency noted. Additional details can be found in Youthprise?s Corrective Action Plan.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number or Year (or Other Identifying Number): CY2021 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The City received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $18,042,360. The City enlisted a non-profit, Heart City Health Center, Inc., to assist with public health information and paid them $50,000. The payment was made under the Responding to Public Health and Economic Impacts of COVID-19 eligible use category. Documentation to support the payment included an invoice from the Heart City Health Center, Inc., Board of Works Resolution 21-R-19, and Ordinance 5861. The Board of Works approved Resolution 21-R-19 on December 28, 2021. The resolution states in part, "Heart City Health Center is a separate legal entity from the City of Elkhart and as a separate legal entity, requires the formation of a subrecipient agreement to transfer funds from the City's ARPA Coronavirus State and Local Fiscal Recovery Funds allocation to Heart City Health . . . now, therefore be it resolved, the Board of Public Works approves Heart City Health Center Inc. as a subrecipient of fifty thousand dollars in ARPA state and local fiscal recovery funds, and authorizes the Department of Law to prepare an appropriates subrecipient agreement for execution by the Board of Works and Heart City Health Center Inc. for the purposes approved herein . . ." The City provided SLFRF award funds to the Heart City Health Center, Inc. to carry out a program on the City's behalf, making the Heart City Health Center, Inc. a subrecipient of the City, as noted in their resolution, and, therefore, subject to subrecipient monitoring. The City was unable provide a copy of the subaward agreement or other supporting documentation to show evaluation of the subrecipient's risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states in part: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. . . . Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non- Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and . . ." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ? 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with ? 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the passthrough entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the City was not properly designed nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City was responsible for providing a subaward agreement and monitoring the nonprofit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2022-002 Finding – Federal Award Type: Subrecipient Monitoring –Material Non-Compliance and Weakness in Internal Control Over Compliance. Identification of Federal Program: Research and Development Cluster: AL Number: 81.086 Conservation Research and Development Program Criteria / Requirement: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2CFR§200.331, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, all requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients. Condition / Context: Forth passed through $75,170 in funding to subrecipients under Assistance Listing 81.086. During our audit, we noted that Forth did not have documented written procedures or controls in place to ensure compliance with the U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) subrecipient monitoring requirements. Per review of subaward contracts, required federal contract information was not clearly identified. Further, subrecipients were not evaluated for risk of non-compliance, were not monitored, and there were no procedures in place to ensure the accountability of for-profit subrecipients. Cause: Procedures are not in place to ensure that Forth is providing adequate subaward
2022-004 Subrecipient Monitoring Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Effort Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: 2022 and 2021 Pass-through Entity: n/a Questioned Costs: None Type of Finding: Material Weakness in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: The requirements for subrecipient monitoring for the subaward are contained in 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); federal awarding agency regulations; and the terms and conditions of the award. The County must do the following: (1) Review the pass-through entity (PTE’s) subrecipient monitoring policies and procedures to gain an understanding of the PTE’s process to identify subawards, evaluate risk of noncompliance, and perform monitoring procedures based upon identified risks. (2) Review subaward documents including the terms and conditions of the subaward to ascertain if, at the time of subaward (or subsequent subaward modification), the PTE made the subrecipient aware of the award information required by 2 CFR section 200.331(a) sufficient for the PTE to comply with federal statutes, regulations, and the terms and conditions of the award. (3) Review the PTE’s documentation of monitoring the subaward and consider if the PTE’s monitoring provided reasonable assurance that the subrecipient used the subaward for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. (4) Ascertain if the PTE verified that subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, met this requirement (2 CFR section 200.331(f)). This verification may be performed as part of the required monitoring under 2 CFR section 200.331(d)(2) to ensure that the subrecipient takes timely and appropriate action on deficiencies detected though audits. Condition: During our testing, it was noted the County did not have adequate controls designed to ensure that subrecipient monitoring requirements were being met. Context: Of the 3 subrecipients tested, all 3 did not included signed, formal agreements between the County and subrecipients. Cause: The County has not designed and implemented internal controls to ensure compliance with subrecipient monitoring requirements. Effect: The County was not communicating the required information to subrecipients through a formal agreement. Recommendation: We recommend the County implement internal control(s) to ensure that required subrecipient monitoring through formal agreements is completed. Repeat Finding: No Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Program: Assistance Listing #14.228, Community Development Block Grant, U.S. Department of Housing and Urban Development, Passed through the Pennsylvania Department of Community and Economic Development, Pass-Through Entity Identifying Numbers: C000066177, C000067301, C000070907, C000073805, C000076178, C000075471 and C000062142 Assistance Listing #21.023, Emergency Rental Assistance Program, U.S. Department of Treasury, Passed through the Pennsylvania Department of Human Services, Pass-Through Entity Identifying Number: N/A Prior Year Finding Number 2021-004 Criteria: The requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), §200.331 Requirements for Pass-through Entities, requires entities who pass federal funding through to subrecipients evaluate each subrecipient's risk of noncompliance. As detailed in 2 CFR sections 200.331(d) through (f), the Uniform Guidance requires pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient, as detailed in 2 CFR section 200.521. Condition: As part of our follow-up on previous audit findings, it was noted that the County is not performing monitoring activities over its subrecipient in compliance with the Uniform Guidance. Additionally, it was noted that the County did not issue a management decision for an audit finding pertaining to the Federal award provided to the subrecipient in a prior year. Questioned Costs: N/A Cause: The County does not have in place sufficient monitoring activities for its subrecipient, representing a significant deficiency in internal control over compliance. Effect: The County is not in compliance with certain requirements of the Uniform Guidance. Context: Title IV-E funding is passed through to the Lycoming-Clinton Mental Health and Intellectual Disabilities Joinder Board. The governing body of the Joinder consists of the Board of Commissioners of Lycoming and Clinton Counties, which allow each County 50% control. While it has been determined that the County has risk assessment and subrecipient monitoring policies and procedures in place for its pass-through entities related to other federal programs, management at the County has taken the position that the Title IV-E program is being monitored because of the unique nature of the funding being passed through to the Joinder Board. Recommendation: We recommend that County management perform monitoring activities for the Title IV-E program similar to the policies and procedures it has in place for its other pass-through activities. Views of Responsible Officials and Planned Corrective Actions: Management understands and is working to provide better oversight and monitoring of entities that receive pass-through grant dollars. See corrective action plan.