Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Department of Economic Security (Department) awarded $3.3 million to 11 subrecipients during fiscal year 2023, or 8.3 percent of the Department’s $40.2 million of total federal expenditures for this federal program, but did not perform the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Further, the Department improperly classified $2.4 million of contractor expenditures, or 6 percent of the program’s total federal expenditures, as subrecipient expenditures on the State’s initial schedule of expenditures of federal awards (SEFA). Effect—The Department’s failure to perform required monitoring increased the risk that the $3.3 million of program monies the Department awarded to subrecipients may not have been spent in accordance with the award terms and program or contract requirements. Further, the Department’s not properly reporting contractor versus subrecipient expenditures on the SEFA increased the risk that subrecipients are not properly identified and monitored by the Department. If monies are spent inconsistent with program and contract requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Further, although the Department corrected the subrecipient misclassification error before the State issued its Single Audit Report, there is an increased risk that the State’s SEFA could contain significant errors and misinform those who are relying on the information. Cause—The Department lacked entity-wide subrecipient-monitoring policies and procedures for its divisions to follow and instead relied on each division administering the program to design and implement its own subrecipient-monitoring procedures. However, of the 2 Department divisions administering the program, 1 was not aware of the subrecipient-monitoring requirements, and the other did not follow its subrecipient-monitoring policies and procedures, as follows: • The Child and Community Services Division (CCSD) personnel responsible for monitoring 5 subrecipients reported that they were not aware of the program’s subrecipient-monitoring requirements because of the program manager being on extended leave, turnover in staff knowledgeable of these requirements, and lack of established policies and procedures over monitoring the program’s subrecipients’ activities. Further, neither the Department nor the CCSD personnel responsible for identifying subrecipients provided guidance to CCSD personnel responsible for subrecipient monitoring. • The CCSD personnel responsible for monitoring 6 subrecipients reported that they did not follow CCSD’s procedures for monitoring the program’s subrecipients’ activities because they were short-staffed and prioritized monitoring other federal and State grants’ subrecipients’ activities. Further, the incorrect determination and reporting of a subrecipient relationship on the initial SEFA resulted from the Department’s entity-wide form used to determine whether other parties receiving program monies had the role of a subrecipient or contractor lacking detailed guidance for determining the characteristics that support a subrecipient versus a contractor relationship. Criteria—Federal regulation requires the Department to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; reviewing financial and performance reports, verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures (2 CFR §200.332[b] and [d–e]). Further, federal regulation requires the Department to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program’s requirements that the Division should monitor (2 CFR §200.331). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform required monitoring of its subrecipients and their compliance with the award terms and program requirements. 2. Properly classify and report subrecipient expenditures on the State’s SEFA. 3. Develop, implement, and train all divisions on entity-wide written subrecipient-monitoring policies and procedures requiring all divisions to: a. Assess the risk of each subrecipient’s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, if required; follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program; and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 4. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate individuals within each division to perform necessary subrecipient-monitoring procedures. 5. Update the form it uses to determine whether other parties receiving program monies have the role of a subrecipient or contractor to include guidance for how to determine each characteristic of a subrecipient and contractor relationship and require a conclusion to be documented. In addition, train staff to properly complete the form and perform supervisory reviews of it. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
DEPARTMENT OF HUMAN SERVICES SUBRECIPIENT MONITORING Material Weakness Material Noncompliance 2023-018 Strengthen Controls over Subrecipient Monitoring to Ensure Compliance with Uniform Guidance Auditing Requirements. ALN Number(s) 93.558 Temporary Assistance for Needy Families (TANF) 93.489, 93.575, 93.596 Child Care Development Fund (CCDF) 93.568 Low Income Household Energy Assistance (LIHEAP) Federal Award No. G2101MSTANF G2101MSCCDF G2101MSLIEA Questioned Costs N/A Criteria The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities (PTE’s) must verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Additionally, per the MDHS Subgrant/Agreement Manual: All MDHS subgrantees are required to complete the MDHS Subgrantee Audit Information Form (MDHS-DPI-002). This form must be submitted to the Division of Monitoring no later than ninety (90) calendar days after the end of the subgrantee’s fiscal year. This form is necessary to certify the sources and amounts of all Federal awards received and expended by the subgrantee. Condition When performing testwork related to OMB Single Audit Monitoring as of June 30, 2023, the auditor noted 16 instances in which the Mississippi Department of Human Services (MDHS) did not ascertain whether Single Audit Requirements were being met by subgrantees Cause Staff were either unaware or did not follow identified policies and procedures for monitoring requirements. Effect Failure to properly monitor subrecipients could allow noncompliance with federal regulations to occur and go undetected, potentially resulting in fraud, waste, and abuse within the agency. Recommendation We recommend the Mississippi Department of Human Services' Office of Compliance - Division of Monitoring (DM) strengthen controls over subrecipient monitoring for Uniform Guidance audits to ensure recipients expending $750,000 or more in Federal funds during their fiscal year are meeting Uniform Guidance Audit requirements. Repeat Finding Yes; 2022-018. Statistically Valid No.
DEPARTMENT OF HUMAN SERVICES SUBRECIPIENT MONITORING Material Weakness Material Noncompliance 2023-018 Strengthen Controls over Subrecipient Monitoring to Ensure Compliance with Uniform Guidance Auditing Requirements. ALN Number(s) 93.558 Temporary Assistance for Needy Families (TANF) 93.489, 93.575, 93.596 Child Care Development Fund (CCDF) 93.568 Low Income Household Energy Assistance (LIHEAP) Federal Award No. G2101MSTANF G2101MSCCDF G2101MSLIEA Questioned Costs N/A Criteria The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities (PTE’s) must verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Additionally, per the MDHS Subgrant/Agreement Manual: All MDHS subgrantees are required to complete the MDHS Subgrantee Audit Information Form (MDHS-DPI-002). This form must be submitted to the Division of Monitoring no later than ninety (90) calendar days after the end of the subgrantee’s fiscal year. This form is necessary to certify the sources and amounts of all Federal awards received and expended by the subgrantee. Condition When performing testwork related to OMB Single Audit Monitoring as of June 30, 2023, the auditor noted 16 instances in which the Mississippi Department of Human Services (MDHS) did not ascertain whether Single Audit Requirements were being met by subgrantees Cause Staff were either unaware or did not follow identified policies and procedures for monitoring requirements. Effect Failure to properly monitor subrecipients could allow noncompliance with federal regulations to occur and go undetected, potentially resulting in fraud, waste, and abuse within the agency. Recommendation We recommend the Mississippi Department of Human Services' Office of Compliance - Division of Monitoring (DM) strengthen controls over subrecipient monitoring for Uniform Guidance audits to ensure recipients expending $750,000 or more in Federal funds during their fiscal year are meeting Uniform Guidance Audit requirements. Repeat Finding Yes; 2022-018. Statistically Valid No.
DEPARTMENT OF HUMAN SERVICES SUBRECIPIENT MONITORING Material Weakness Material Noncompliance 2023-018 Strengthen Controls over Subrecipient Monitoring to Ensure Compliance with Uniform Guidance Auditing Requirements. ALN Number(s) 93.558 Temporary Assistance for Needy Families (TANF) 93.489, 93.575, 93.596 Child Care Development Fund (CCDF) 93.568 Low Income Household Energy Assistance (LIHEAP) Federal Award No. G2101MSTANF G2101MSCCDF G2101MSLIEA Questioned Costs N/A Criteria The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities (PTE’s) must verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Additionally, per the MDHS Subgrant/Agreement Manual: All MDHS subgrantees are required to complete the MDHS Subgrantee Audit Information Form (MDHS-DPI-002). This form must be submitted to the Division of Monitoring no later than ninety (90) calendar days after the end of the subgrantee’s fiscal year. This form is necessary to certify the sources and amounts of all Federal awards received and expended by the subgrantee. Condition When performing testwork related to OMB Single Audit Monitoring as of June 30, 2023, the auditor noted 16 instances in which the Mississippi Department of Human Services (MDHS) did not ascertain whether Single Audit Requirements were being met by subgrantees Cause Staff were either unaware or did not follow identified policies and procedures for monitoring requirements. Effect Failure to properly monitor subrecipients could allow noncompliance with federal regulations to occur and go undetected, potentially resulting in fraud, waste, and abuse within the agency. Recommendation We recommend the Mississippi Department of Human Services' Office of Compliance - Division of Monitoring (DM) strengthen controls over subrecipient monitoring for Uniform Guidance audits to ensure recipients expending $750,000 or more in Federal funds during their fiscal year are meeting Uniform Guidance Audit requirements. Repeat Finding Yes; 2022-018. Statistically Valid No.
DEPARTMENT OF HUMAN SERVICES SUBRECIPIENT MONITORING Material Weakness Material Noncompliance 2023-018 Strengthen Controls over Subrecipient Monitoring to Ensure Compliance with Uniform Guidance Auditing Requirements. ALN Number(s) 93.558 Temporary Assistance for Needy Families (TANF) 93.489, 93.575, 93.596 Child Care Development Fund (CCDF) 93.568 Low Income Household Energy Assistance (LIHEAP) Federal Award No. G2101MSTANF G2101MSCCDF G2101MSLIEA Questioned Costs N/A Criteria The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities (PTE’s) must verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Additionally, per the MDHS Subgrant/Agreement Manual: All MDHS subgrantees are required to complete the MDHS Subgrantee Audit Information Form (MDHS-DPI-002). This form must be submitted to the Division of Monitoring no later than ninety (90) calendar days after the end of the subgrantee’s fiscal year. This form is necessary to certify the sources and amounts of all Federal awards received and expended by the subgrantee. Condition When performing testwork related to OMB Single Audit Monitoring as of June 30, 2023, the auditor noted 16 instances in which the Mississippi Department of Human Services (MDHS) did not ascertain whether Single Audit Requirements were being met by subgrantees Cause Staff were either unaware or did not follow identified policies and procedures for monitoring requirements. Effect Failure to properly monitor subrecipients could allow noncompliance with federal regulations to occur and go undetected, potentially resulting in fraud, waste, and abuse within the agency. Recommendation We recommend the Mississippi Department of Human Services' Office of Compliance - Division of Monitoring (DM) strengthen controls over subrecipient monitoring for Uniform Guidance audits to ensure recipients expending $750,000 or more in Federal funds during their fiscal year are meeting Uniform Guidance Audit requirements. Repeat Finding Yes; 2022-018. Statistically Valid No.
DEPARTMENT OF HUMAN SERVICES SUBRECIPIENT MONITORING Material Weakness Material Noncompliance 2023-018 Strengthen Controls over Subrecipient Monitoring to Ensure Compliance with Uniform Guidance Auditing Requirements. ALN Number(s) 93.558 Temporary Assistance for Needy Families (TANF) 93.489, 93.575, 93.596 Child Care Development Fund (CCDF) 93.568 Low Income Household Energy Assistance (LIHEAP) Federal Award No. G2101MSTANF G2101MSCCDF G2101MSLIEA Questioned Costs N/A Criteria The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities (PTE’s) must verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Additionally, per the MDHS Subgrant/Agreement Manual: All MDHS subgrantees are required to complete the MDHS Subgrantee Audit Information Form (MDHS-DPI-002). This form must be submitted to the Division of Monitoring no later than ninety (90) calendar days after the end of the subgrantee’s fiscal year. This form is necessary to certify the sources and amounts of all Federal awards received and expended by the subgrantee. Condition When performing testwork related to OMB Single Audit Monitoring as of June 30, 2023, the auditor noted 16 instances in which the Mississippi Department of Human Services (MDHS) did not ascertain whether Single Audit Requirements were being met by subgrantees Cause Staff were either unaware or did not follow identified policies and procedures for monitoring requirements. Effect Failure to properly monitor subrecipients could allow noncompliance with federal regulations to occur and go undetected, potentially resulting in fraud, waste, and abuse within the agency. Recommendation We recommend the Mississippi Department of Human Services' Office of Compliance - Division of Monitoring (DM) strengthen controls over subrecipient monitoring for Uniform Guidance audits to ensure recipients expending $750,000 or more in Federal funds during their fiscal year are meeting Uniform Guidance Audit requirements. Repeat Finding Yes; 2022-018. Statistically Valid No.
DEPARTMENT OF HUMAN SERVICES SUBRECIPIENT MONITORING Material Weakness Material Noncompliance 2023-018 Strengthen Controls over Subrecipient Monitoring to Ensure Compliance with Uniform Guidance Auditing Requirements. ALN Number(s) 93.558 Temporary Assistance for Needy Families (TANF) 93.489, 93.575, 93.596 Child Care Development Fund (CCDF) 93.568 Low Income Household Energy Assistance (LIHEAP) Federal Award No. G2101MSTANF G2101MSCCDF G2101MSLIEA Questioned Costs N/A Criteria The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities (PTE’s) must verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Additionally, per the MDHS Subgrant/Agreement Manual: All MDHS subgrantees are required to complete the MDHS Subgrantee Audit Information Form (MDHS-DPI-002). This form must be submitted to the Division of Monitoring no later than ninety (90) calendar days after the end of the subgrantee’s fiscal year. This form is necessary to certify the sources and amounts of all Federal awards received and expended by the subgrantee. Condition When performing testwork related to OMB Single Audit Monitoring as of June 30, 2023, the auditor noted 16 instances in which the Mississippi Department of Human Services (MDHS) did not ascertain whether Single Audit Requirements were being met by subgrantees Cause Staff were either unaware or did not follow identified policies and procedures for monitoring requirements. Effect Failure to properly monitor subrecipients could allow noncompliance with federal regulations to occur and go undetected, potentially resulting in fraud, waste, and abuse within the agency. Recommendation We recommend the Mississippi Department of Human Services' Office of Compliance - Division of Monitoring (DM) strengthen controls over subrecipient monitoring for Uniform Guidance audits to ensure recipients expending $750,000 or more in Federal funds during their fiscal year are meeting Uniform Guidance Audit requirements. Repeat Finding Yes; 2022-018. Statistically Valid No.
DEPARTMENT OF HUMAN SERVICES SUBRECIPIENT MONITORING Material Weakness Material Noncompliance 2023-018 Strengthen Controls over Subrecipient Monitoring to Ensure Compliance with Uniform Guidance Auditing Requirements. ALN Number(s) 93.558 Temporary Assistance for Needy Families (TANF) 93.489, 93.575, 93.596 Child Care Development Fund (CCDF) 93.568 Low Income Household Energy Assistance (LIHEAP) Federal Award No. G2101MSTANF G2101MSCCDF G2101MSLIEA Questioned Costs N/A Criteria The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities (PTE’s) must verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Additionally, per the MDHS Subgrant/Agreement Manual: All MDHS subgrantees are required to complete the MDHS Subgrantee Audit Information Form (MDHS-DPI-002). This form must be submitted to the Division of Monitoring no later than ninety (90) calendar days after the end of the subgrantee’s fiscal year. This form is necessary to certify the sources and amounts of all Federal awards received and expended by the subgrantee. Condition When performing testwork related to OMB Single Audit Monitoring as of June 30, 2023, the auditor noted 16 instances in which the Mississippi Department of Human Services (MDHS) did not ascertain whether Single Audit Requirements were being met by subgrantees Cause Staff were either unaware or did not follow identified policies and procedures for monitoring requirements. Effect Failure to properly monitor subrecipients could allow noncompliance with federal regulations to occur and go undetected, potentially resulting in fraud, waste, and abuse within the agency. Recommendation We recommend the Mississippi Department of Human Services' Office of Compliance - Division of Monitoring (DM) strengthen controls over subrecipient monitoring for Uniform Guidance audits to ensure recipients expending $750,000 or more in Federal funds during their fiscal year are meeting Uniform Guidance Audit requirements. Repeat Finding Yes; 2022-018. Statistically Valid No.
Finding 2023-004: Subrecipient Management and Monitoring (Material Weakness) Information on the Federal Programs: Assistance Listing Number 98.001 Criteria: 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: Astraea has a subaward policy, which requires a risk assessment form be completed for each potential subrecipient. However, this step was not completed for all of the subrecipients in which Astraea engaged with during the fiscal year. Cause: Astraea did not adhere to its policy in regards to risk assessment procedures. Context: Astraea failed to perform 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. Effect: Astraea 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. Identification as a Repeat Finding, if Applicable: Finding 2022-004 Recommendation: We recommend Astraea adhere to its current subaward policy and ensure the risk assessment procedures over all of its subrecipients are performed and documented prior to engagement. Based on these risk assessments, Astraea should assign a risk level to each, and then determine the monitoring tools to apply based on these risk levels. We also recommend Astraea require its subrecipients to submit financial reports demonstrating use of each advance before advancing more funds, to ensure subrecipients are expending funds appropriately.
Federal Agency: U.S. Department of Commerce Federal Program: Economic Development Cluster Assistance Listing 11.307 COVID-19–Economic Adjustment Assistance EDA Award No. 08-79-05412 Criteria or specific requirement: Subrecipient Monitoring (2 CFR 200.331 - 200.333) and Reporting (2 CFR Part 170). Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred to 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). Condition: The Organization subawarded a portion of this award with out written approval from the Economic Development Administration. The Organization also failed to file the FFATA reporting submission for the fiscal year ended June 30, 2023. Questioned Costs: $215,000 Context: The Organization did not obtain approval or report the subaward information for the one subrecipient that received $215,000 in fiscal year 2023. Effect: The noncompliance could have a direct and material effect on the financial statements. Cause: The Organization did not have adequate controls or procedures in place to identify the applicable subrecipient monitoring and reporting requirements and ensure the information was filed accurately and timely. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend implementing procedures and controls to ensure subrecipient monitoring and reporting requirements are monitored and required reports are filed by their respective due dates as required by the grant agreement and Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding and recommendation. See separate report for planned corrective actions.
2023-009 – Subrecipient Monitoring Finding Type. Immaterial Noncompliance/Sigificant Deficiency in Internal Control over Compliance (Subrecipient Monitoring). Program. Substance Abuse and Mental Health Services - Projects of Regional and National Significance; U.S. Department of Health and Human Services; Assistance Listing Number 93.243; Award Number 1H79SM084918-01. Criteria. When a grant recipient makes subawards to other recipients, certain compliance requirements are required in order to monitor the activity of the subrecipients. The Uniform Guidance requires that the pass-through entity clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.331(a)(1); (2) all requirements imposed by the Pass-Through Entity (PTE) on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.331(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.331(a)(3)). The Uniform Guidance further requires that the pass-through entity valuate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.331(b)). This evaluation of risk may include consideration of such factors as: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives single audit in accordance with 2 CFR part 200, subpart F, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of federal awarding agency monitoring (e.g., if the subrecipient also receives federal awards directly from a federal awarding agency). Condition. Subaward contracts review did not contain appropriate information related to the federal program. No assistance listing number or federal program name was noted in the language of the agreements. In addition, no evidence of formal risk assessment was documented. Cause. The City does not have the proper internal controls in place to ensure that contract language contains all of the information required to be communicated under the Uniform Guidance or that documentation of the risk assessment process related to subrecipients of federal awards is maintained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as our testing of the monitoring process and tests of transactions did not indicate any unallowable costs. Recommendation. We recommend that the City implement necessary internal controls to ensure documentation of its compliance with the requirements of the Uniform Guidance is maintained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented. Part of the solution will be implementing grant management software.
Program: Housing Voucher Cluster Federal Financial Assistance Listing No.: 14.871, 14.879 Federal Agency: U.S. Department of Housing and Urban Development Passed-through: n/a – direct award Award Number and Year: CA131, 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. 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. We found that the County does have documented policies and procedures for the evaluation of the subrecipient’s risk of noncompliance and subrecipient monitoring procedures; however, the risk assessment was performed in November 2022, which was after the agreement was in effect for the fiscal year 2023, and the review of the risk assessment was not documented until March 2023. Based on the County’s policy for monitoring of the subrecipient based on the assessed level of risk, the County was required to obtain and review quarterly reports and perform a site visit. There was no documentation supporting the receipt, review, and results of the review of the quarterly reports. There was also no evidence of the review and communication of the results of the site visit to the subrecipient. Cause: The County was unable to finalize the revised subrecipient agreement prior to fiscal year 2023, the County department adopted the policies and procedures to perform the risk assessment after the beginning of fiscal year 2023, and the subrecipient monitoring policies and procedures do not require the department to document its review and results of monitoring procedures. Effect: The County did not include all the required elements in their subaward, did not perform a risk assessment prior to the fiscal year 2023 subaward, and did not document the results of the monitoring procedures performed over the subaward. Questioned Costs: None reported. Context/Sampling: We selected 100% of the County’s subrecipients of the program. Repeat Finding from Prior Year(s): Yes, prior year finding 2022-003. Recommendation: We recommend that the County continue to strengthen its policies and procedures over subrecipient monitoring to ensure that a risk assessment is completed prior to the start of the annual award and reviewed timely, and strengthen its policies and procedures to ensure that the results of monitoring procedures are documented and review. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Program: Housing Voucher Cluster Federal Financial Assistance Listing No.: 14.871, 14.879 Federal Agency: U.S. Department of Housing and Urban Development Passed-through: n/a – direct award Award Number and Year: CA131, 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. 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. We found that the County does have documented policies and procedures for the evaluation of the subrecipient’s risk of noncompliance and subrecipient monitoring procedures; however, the risk assessment was performed in November 2022, which was after the agreement was in effect for the fiscal year 2023, and the review of the risk assessment was not documented until March 2023. Based on the County’s policy for monitoring of the subrecipient based on the assessed level of risk, the County was required to obtain and review quarterly reports and perform a site visit. There was no documentation supporting the receipt, review, and results of the review of the quarterly reports. There was also no evidence of the review and communication of the results of the site visit to the subrecipient. Cause: The County was unable to finalize the revised subrecipient agreement prior to fiscal year 2023, the County department adopted the policies and procedures to perform the risk assessment after the beginning of fiscal year 2023, and the subrecipient monitoring policies and procedures do not require the department to document its review and results of monitoring procedures. Effect: The County did not include all the required elements in their subaward, did not perform a risk assessment prior to the fiscal year 2023 subaward, and did not document the results of the monitoring procedures performed over the subaward. Questioned Costs: None reported. Context/Sampling: We selected 100% of the County’s subrecipients of the program. Repeat Finding from Prior Year(s): Yes, prior year finding 2022-003. Recommendation: We recommend that the County continue to strengthen its policies and procedures over subrecipient monitoring to ensure that a risk assessment is completed prior to the start of the annual award and reviewed timely, and strengthen its policies and procedures to ensure that the results of monitoring procedures are documented and review. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
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.
2023-004 Subaward Monitoring Federal Program: Research and Development Cluster (ALN 47.041-Engineering, Award 1940055, Award Period 9/1/19 – 3/31/25) Federal Agency: National Science Foundation Criteria: Written documentation pertaining to the identification, risk assessment of and monitoring of sub awardees was not available as required by 2 CFR 200.331-333. Condition: While no funds were passed through to subrecipients during the year, the Organization still lacked documentation to indicate compliance with subaward monitoring responsibilities required Per 2 CFR 200.331-333, including the policies and procedures to identify and assess risks and monitor subaward recipients as required by grant recipients. Cause: The Organization lacked written policies and procedures to execute appropriate subaward monitoring responsibilities. Effect: The organization is not compliant with 2 CFR 200.331-333 which requires the Organization to monitor that the sub awardee is maintaining adequate financial reporting, recordkeeping and compliance with respect to funds received. The Organization could not document sub-awardee risk assessment or monitoring or reviewed debarment or suspension of the sub-awardee. Without policies to document, monitor and risk assess a sub awardee, the Organization could inadvertently engage in a relationship with a sub awardee of higher risk without the appropriate level of oversight to ensure the sub awardee is expending the funds in accordance with the provisions and terms of the subaward. Identification as a repeat finding, if applicable: The finding is a repeat of Finding 2022-006 in the prior year. Recommendation: We recommend the Organization establish policy and procedures to document how sub awardees are selected, monitored and perform required risk assessment pertaining to the selection of the sub awardee. View of Responsible Officials: The Organization has since established appropriate procedures for sub awardee monitoring. Questioned Costs: None
Material Weakness Finding No. 2023-002: Subrecipient Monitoring U.S. Department of Education Native Hawaiian Education Act Program Federal Assistance Listing Number 84.362A. U.S. Department of Health and Human Services Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. Criteria Pursuant to Title 2, Subtitle A Chapter II, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), “a non-Federal entity may concurrently receive Federal awards as a recipient, subrecipient, and a contractor, depending on the substance of its agreements with the Federal awarding agencies and pass-through entities. Therefore, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.” Condition We noted that the Organization did not make case-by-case determinations of each agreement with parties to which the Organization passed through Federal program funds to determine whether they were deemed to be either subrecipients or contractors. Cause Management had not updated its policies and procedures to incorporate the relevant Uniform Guidance subrecipient monitoring and management policies. Effect The lack of subrecipient monitoring and management policies of the Uniform Guidance could result in noncompliance by the Organization with the stipulated requirements for pass-through entities, as well as noncompliance of subrecipient requirements by the entities receiving the pass-through funds from the Organization. Identification of Repeat Finding This finding was reported as a federal award finding in the immediate previous audit as Finding No. 2022-002. Recommendation We recommend that the Organization incorporate the subrecipient monitoring and management provisions of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance to their policies and procedures manual to ensure compliance with Federal standards.
Criteria In accordance with Title 2 of the Code of Federal Regulations (CFR) § 200.332, all pass-through entities (PTE) must: (a) Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient’s name (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; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). (2) All requirements of the subaward, including requirements imposed by 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 for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see § 200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency; (4) Indirect cost rate: (i) An approved indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, a pass-through entity must determine the appropriate rate in collaboration with the subrecipient. The indirect cost rate may be either: (A) An indirect cost rate negotiated between the pass-through entity and the subrecipient. These rates may be based on a prior negotiated rate between a different pass-through entity and the subrecipient, in which case the pass-through entity is not required to collect information justifying the rate but may elect to do so; or (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require the use of the de minimis indirect cost rate if the subrecipient has an approved indirect cost rate negotiated with the Federal Government. Subrecipients may 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 access the subrecipient’s records and financial statements for the pass-through entity to fulfill its monitoring requirements; and (6) Appropriate terms and conditions concerning the closeout of the subaward. (c) Evaluate each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient’s risk, a pass-through entity should consider the following: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). (d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (f) Depending upon the pass-through entity’s assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient’s program operations; and (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (g) Verify that a subrecipient is audited as required by subpart F of this part. (h) Consider whether the results of a subrecipient’s audit, site visits, or other monitoring necessitate adjustments to the pass-through entity’s records. (i) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 and in program regulations. Condition During our audit of the TANF program, we noted that the initial schedule of expenditures of federal awards did not include expenditures passed through to subrecipients. Upon inquiry, program management did not have a clear understanding of the difference between a subrecipient and a contractor and, as a result, had not previously performed a formal analysis. Using the criteria in 2 CFR § 200.331 Subrecipient and contractor determinations, program management performed an analysis of payments made to contractors and identified two entities that met the definition of a subrecipient. Payments made to these entities in fiscal year 2023 totaled $325,914. Because program management did not previously identify any entities as subrecipients, the County did not comply with the requirements of subrecipient monitoring: • The County could not demonstrate that a verification was performed to determine that the entities were not excluded or disqualified from receiving federal funds. While one entity’s contract included reference to 2 CFR Part 376 Nonprocurement, Debarment and Suspension, it did not specifically include a self-certification clause. • Contracts: One contract was deficient and did not identify the contract as a federally funded subaward and did not include the required elements outlined in § 200.332 (b). The contract for the other entity was more prescriptive and included most of the elements in § 200.332 (b) but also did not have current language referencing the Uniform Guidance, which was effective in 2014 (Contract date was December 4, 2019), and instead referred to outdated requirements under OMB Circular A-133. One contract did not address indirect costs. One contract did not address provisions to permit the County as the grantor to access the entity’s records to audit or fulfill other monitoring responsibilities. Both contracts did not address the terms and conditions concerning the closeout of subawards. • The County did not perform the required fraud risk and risk of noncompliance assessment to determine the appropriate level of monitoring. • The County did not develop and document a formal subrecipient monitoring plan. Upon inquiry, program management provided a bulleted list of their monitoring activities; however, reviews, meetings, action items, and follow-up were not formally documented demonstrating the activities were performed. • The County received single audit reports from the two subrecipients identified; however, the County did not reconcile the amounts reported to its records. Cause Program staff were not aware of the requirements to evaluate and classify entities as subcontractor or subrecipient and did not understand the need to formalize a subrecipient monitoring program in accordance with § 200.332. The cause can be partially contributed to turnover in the County’s Health and Human Services Department. Effect Failure to evaluate and identify subrecipients will cause the County to be out of compliance with its oversight responsibilities resulting in the potential for federal funds to be used inappropriately. Failure to provide all the required subaward information may result in subrecipients incorrectly reporting on federal pass-through awards in their Single Audit reports. Failure to have a formal monitoring program that includes risk assessment will result in the County inadequately monitoring the activities of subrecipients and hold them accountable to complete corrective action plans for identified noncompliance. Questioned Costs None. Context The two identified subrecipients were paid $325,914, which is 9% of the total TANF program expenditures reported for fiscal year 2023. The sample was not a statistically valid sample. Recommendation We recommend the County consider the following: 1. Provide comprehensive training to program managers on how to assess if an entity meets the criteria of a subrecipient as defined in § 200.331. 2. Formalize a subrecipient monitoring program based on the criteria in § 200.332. 3. Design a subrecipient agreement template to include all the elements required by 2 CFR § 200.332(b). Incorporate the use of the template in the contracting requirements for all departments receiving federal funds. 4. For existing subrecipients that were not provided the required elements, provide a letter or amended agreement to include all the required elements of 2 CFR § 200.332(b). Views of Responsible Officials and Planned Corrective Action 1. Person Responsible: County Auditor-Controller 2. Corrective Action Plan: The County agrees with the finding and recommendation. The County will implement a formalized monitoring program and agreement template to identify subrecipients based on criteria in § 200.332. The County will provide a comprehensive training to program managers to implement the monitoring program and subrecipient agreement template. In addition, the County will include direction to project managers to review current awards to identify existing subrecipients that were not provided a subrecipient agreement with all of the required elements from CFR § 200.332. 3. Anticipated Implementation date: June 30, 2026