Assistance Listings number and name: 21.019 COVID-19 Coronavirus Relief Fund Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $8.5 million to 9 subrecipients during fiscal year 2022, or 6.6 percent of the Office’s $128.6 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the terms and program requirements. Effect—The Office’s lack of required monitoring increases the risk that the $8.5 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2021-101 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 21.019 COVID-19 Coronavirus Relief Fund Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $8.5 million to 9 subrecipients during fiscal year 2022, or 6.6 percent of the Office’s $128.6 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the terms and program requirements. Effect—The Office’s lack of required monitoring increases the risk that the $8.5 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2021-101 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 21.019 COVID-19 Coronavirus Relief Fund Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $8.5 million to 9 subrecipients during fiscal year 2022, or 6.6 percent of the Office’s $128.6 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the terms and program requirements. Effect—The Office’s lack of required monitoring increases the risk that the $8.5 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2021-101 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 21.019 COVID-19 Coronavirus Relief Fund Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $8.5 million to 9 subrecipients during fiscal year 2022, or 6.6 percent of the Office’s $128.6 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the terms and program requirements. Effect—The Office’s lack of required monitoring increases the risk that the $8.5 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2021-101 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 21.019 COVID-19 Coronavirus Relief Fund Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $8.5 million to 9 subrecipients during fiscal year 2022, or 6.6 percent of the Office’s $128.6 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the terms and program requirements. Effect—The Office’s lack of required monitoring increases the risk that the $8.5 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2021-101 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 21.019 COVID-19 Coronavirus Relief Fund Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $8.5 million to 9 subrecipients during fiscal year 2022, or 6.6 percent of the Office’s $128.6 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the terms and program requirements. Effect—The Office’s lack of required monitoring increases the risk that the $8.5 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2021-101 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 21.019 COVID-19 Coronavirus Relief Fund Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $8.5 million to 9 subrecipients during fiscal year 2022, or 6.6 percent of the Office’s $128.6 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the terms and program requirements. Effect—The Office’s lack of required monitoring increases the risk that the $8.5 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2021-101 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 21.019 COVID-19 Coronavirus Relief Fund Award number and year: None Federal agency: U.S. Department of the Treasury Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $8.5 million to 9 subrecipients during fiscal year 2022, or 6.6 percent of the Office’s $128.6 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the terms and program requirements. Effect—The Office’s lack of required monitoring increases the risk that the $8.5 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2021-101 and was initially reported in fiscal year 2021.
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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to 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—Nine State grantees paid $163.1 million to 495 subrecipients during fiscal year 2022, or 8.6 percent of the State’s $1.9 billion total federal expenditures for this federal program, but 3 of the 5 State grantees we tested did not perform all the required monitoring of the subrecipients’ activities or compliance with the federal award terms and program requirements. Specifically, the 3 State grantees identified below performed some monitoring during the year, which consisted only of reviewing some interim and the final financial and activity reports; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the federal award terms and program requirements. State Grantee Amount awarded Number of subrecipients Arizona Governor’s Office of Strategic Planning and Budgeting (Office) $113,947,556 222 Arizona Office of Tourism (AOT) 13,094,509 80 Arizona Supreme Court—Administrative Office of the Courts (AOC) 71,927 6 Total $127,113,992 308 Effect—The 3 State grantees’ lack of required monitoring increased the risk that the $127.1 million of program monies they disbursed to 308 subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Despite subrecipient-monitoring requirements being included in the federal regulations, 2 State grantees did not follow its existing subrecipient-monitoring policies and procedures, and 2 State grantees did not develop and implement subrecipient-monitoring policies and procedures to comply with these federal requirements. Specifically, Office management reported that its staffing levels were not sufficient to perform all the required subrecipient-monitoring procedures in its established policies and procedures. In addition, AOT management reported that it misunderstood the State guidance received, and it performed only limited monitoring procedures for subrecipients who expended more than $750,000 of AOT awards during the year. Finally, AOC management reported that there was a misunderstanding on which State grantee was responsible for performing the subrecipient-monitoring of the monies they passed through to a subrecipient and consequently did not develop all the necessary subrecipient monitoring policies and procedures. Criteria—Federal regulation requires State grantees to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, the Office established subrecipient-monitoring policies and procedures, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments (Grants Management Manual – Grantor, Chapter 8 – Award Monitoring). Lastly, federal regulation requires State grantees to establish and maintain 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— 1. The Office and AOT should ensure they perform required monitoring of their subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. The Office should allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 3. AOC should develop and implement policies and procedures and perform required monitoring of their subrecipients to ensure their compliance with award terms and program requirements. Specifically, AOC should: 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any actions taken, if appropriate. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.425C COVID-19 Education Stabilization Fund—Governor’s Emergency Education Relief (GEER) Fund Award numbers and years: S425C200052, June 2, 2020 through September 30, 2021; S425C210052, January 8, 2021 through September 30, 2022 Federal agency: U.S. Department of Education Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $12.3 million to 13 subrecipients during fiscal year 2022, or 38 percent of the Office’s $32.5 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing financial and activity reports if submitted by the subrecipient; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the award terms and program requirements. Effect—The Office’s lack of required monitoring increased the risk that the $12.3 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its various monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the various monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, federal regulation requires the Office to establish and maintain 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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. This finding is similar to prior-year finding 2021-105 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 84.425C COVID-19 Education Stabilization Fund—Governor’s Emergency Education Relief (GEER) Fund Award numbers and years: S425C200052, June 2, 2020 through September 30, 2021; S425C210052, January 8, 2021 through September 30, 2022 Federal agency: U.S. Department of Education Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $12.3 million to 13 subrecipients during fiscal year 2022, or 38 percent of the Office’s $32.5 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing financial and activity reports if submitted by the subrecipient; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the award terms and program requirements. Effect—The Office’s lack of required monitoring increased the risk that the $12.3 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its various monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the various monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, federal regulation requires the Office to establish and maintain 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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. This finding is similar to prior-year finding 2021-105 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 84.425C COVID-19 Education Stabilization Fund—Governor’s Emergency Education Relief (GEER) Fund Award numbers and years: S425C200052, June 2, 2020 through September 30, 2021; S425C210052, January 8, 2021 through September 30, 2022 Federal agency: U.S. Department of Education Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $12.3 million to 13 subrecipients during fiscal year 2022, or 38 percent of the Office’s $32.5 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing financial and activity reports if submitted by the subrecipient; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the award terms and program requirements. Effect—The Office’s lack of required monitoring increased the risk that the $12.3 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its various monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the various monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, federal regulation requires the Office to establish and maintain 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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. This finding is similar to prior-year finding 2021-105 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 84.425C COVID-19 Education Stabilization Fund—Governor’s Emergency Education Relief (GEER) Fund Award numbers and years: S425C200052, June 2, 2020 through September 30, 2021; S425C210052, January 8, 2021 through September 30, 2022 Federal agency: U.S. Department of Education Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $12.3 million to 13 subrecipients during fiscal year 2022, or 38 percent of the Office’s $32.5 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing financial and activity reports if submitted by the subrecipient; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the award terms and program requirements. Effect—The Office’s lack of required monitoring increased the risk that the $12.3 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its various monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the various monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, federal regulation requires the Office to establish and maintain 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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. This finding is similar to prior-year finding 2021-105 and was initially reported in fiscal year 2021.
Assistance Listings number and name: 84.425C COVID-19 Education Stabilization Fund—Governor’s Emergency Education Relief (GEER) Fund Award numbers and years: S425C200052, June 2, 2020 through September 30, 2021; S425C210052, January 8, 2021 through September 30, 2022 Federal agency: U.S. Department of Education Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition—The Arizona Governor’s Office of Strategic Planning and Budgeting (Office) awarded $12.3 million to 13 subrecipients during fiscal year 2022, or 38 percent of the Office’s $32.5 million total federal expenditures for this federal program, but did not perform all the required monitoring of the subrecipients’ activities or compliance with the award terms and program requirements. Specifically, the Office performed some monitoring during the year, which consisted only of reviewing financial and activity reports if submitted by the subrecipient; however, those monitoring procedures alone were not sufficient to evaluate whether subrecipients used program monies in accordance with the award terms and program requirements. Effect—The Office’s lack of required monitoring increased the risk that the $12.3 million of program monies the Office awarded to subrecipients may not have been spent in accordance with the award terms and program requirements. If monies are spent inconsistent with program requirements, those who were intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Cause—Office management reported that it did not have enough staff to perform its various monitoring procedures, and instead, the Office performed only limited monitoring procedures. Specifically, the Office had policies and procedures to follow for performing the various monitoring procedures for its subrecipients, including how it should consider and assess risk of each subrecipient and carry out required and various other monitoring procedures based on those risk assessments. However, Office management reported that its staffing levels were not sufficient to perform all the required procedures. Criteria—Federal regulations require the Office to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient’s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include 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 (2 CFR §§200.332[b] and [d – e]). Further, federal regulation requires the Office to establish and maintain 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 Office should: 1. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following their established policies and procedures 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, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Office actions taken, if appropriate. 2. Allocate sufficient resources, such as staffing, to comply with the award terms and program requirements, and designate an individual to perform necessary subrecipient-monitoring procedures. 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. This finding is similar to prior-year finding 2021-105 and was initially reported in fiscal year 2021.
Assistance Listings numbers and names: 93.558 Temporary Assistance for Needy Families 93.558 COVID-19 Temporary Assistance for Needy Families Award numbers and years: 2101AZTANF, October 1, 2020 through September 30, 2021; 2201AZTANF, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Health and Human Services Compliance requirement: Subrecipient monitoring Questioned costs: $6,754 Condition—Contrary to federal regulations and its federal award terms, the Department of Economic Security—Division of Community Assistance and Development (Division) reimbursed 1 nonprofit organization subrecipient for federal program costs totaling $6,754 during fiscal year 2022 that were unsupported, unallowable, and/or paid to 1 of the nonprofit organization’s principal officers or their immediate family member in violation of conflict-of-interest disclosure requirements. Specifically, we reviewed 12 reimbursements that included Temporary Assistance for Needy Family program costs totaling $72,800 for the year and found that the Division reimbursed the subrecipient for: • $4,973 for financial and accounting services that were paid to 1 of the nonprofit organization’s principal officers, who served as the Treasurer, and their company, which was not disclosed as a conflict of interest to the Division as required by the Division’s contract with the subrecipient and federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the Division did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the program’s requirements. We noted that the allocation method used may have resulted in multiple programs being overbilled for these services by up to $5,087. • $1,474 for bookkeeping services that were not adequately supported by sufficiently detailed invoices and a signed, written contract having a specified price rate for the services and terms; therefore, we were unable to verify if the amounts paid were appropriate. Further, the Division reimbursed the Treasurer’s family member, whose bookkeeping services company was not disclosed as a conflict of interest to the Division as required by the Division’s contract with the subrecipient and federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the Division did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the program’s requirements. • $307 for incentive payments to the subrecipient’s Executive Director without documentation to support that it was authorized by an agreement, reasonable for the services performed as provided in the subrecipient’s policies, and consistent with compensation paid for similar work in other activities; therefore, we were unable to verify if the amounts reimbursed by the Division were allowable. Additionally, contrary to federal regulations, the Division had not ensured that the subrecipient implemented its competitive purchasing procedures when procuring the professional services described above, and the subrecipient was unable to provide documentation that it had competitively procured the services. The Temporary Assistance for Needy Family program was audited as a major federal program for the State’s fiscal year 2022 single audit. During the audit, we became aware of the potentially noncompliant 12 reimbursements involving 1 of the Division’s nonprofit subrecipients with which it partners to carry out federal programs, including the Emergency Solutions Grants Program, which was not audited as a major federal program for the State’s fiscal year 2022 single audit. Our review of select reimbursements to this subrecipient resulted in similar findings for the Emergency Solutions Grants Program, Continuum of Care Program, and the State Housing Trust Fund that are described in items 2022 115 and 2022-05, respectively. Effect—The Division’s lack of required monitoring increased the risk that the monies it awarded to a nonprofit organization may not have been spent in accordance with the award terms and program requirements. Further, the Division’s reimbursing the subrecipient for $6,754 of unallowable or unsupported costs and/or costs paid to the nonprofit organization’s principal officer or their immediate family member in violation of conflict-of-interest disclosure requirements resulted in those monies being unavailable to be spent for their intended purpose to provide housing assistance to individuals in need. Consequently, the Division may be required to return these monies to the federal agency in accordance with federal requirements.1 Cause—Although the Division’s subrecipient-monitoring policies and procedures did not require it to obtain from subrecipients documentation supporting charges for personal and contracted professional services to verify allowability when subrecipients requested reimbursement, the policies and procedures required an on-site monitoring visit once every 3 years for each subrecipient in which it reviews a sample of the subrecipient’s personal and professional services charges. However, the Division had not performed an on-site monitoring visit of the nonprofit subrecipient since 2018 because it had not yet resumed all its subrecipient-monitoring activities, such as conducting on-site reviews and providing training and technical assistance, since suspending these activities during the COVID-19 pandemic during fiscal year 2020. In addition, the Division had not properly assessed the subrecipient’s risk of noncompliance with its award contract and program requirements to determine the level of monitoring procedures or training the subrecipient needed. For example, the Division was unaware that the subrecipient had not informed it of a principal officer’s conflicts of interest so that the Division could ensure that the principal officer or their immediate family member were not involved in decision-making related to those conflicts and selectively review the related costs and activities for compliance purposes. Criteria—Federal regulations require the Division to monitor subrecipients and include required procedures for assessing the risk of each subrecipient’s noncompliance and implementing appropriate monitoring procedures to address those risk assessments; verifying single audits were conducted timely, if required; reviewing financial and performance reports; following up on and ensuring corrective action is taken on deficiencies that could potentially affect the program; and issuing management decisions on the results of audit findings or monitoring (2 CFR §§200.332, .339, and .521). Federal regulations provide that monitoring procedures the Division may implement to address a subrecipient’s risk assessment include providing training or technical assistance on program-related matters and performing on-site reviews and selective audits of reimbursed costs (2 CFR §200.332[e]). Further, federal regulations require the Division’s subrecipients to allocate allowable costs using a reasonable basis, to use competitive purchasing standards when procuring goods and services, and to disclose in writing to the Division any potential conflicts of interest.2 Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Division should: 1. Immediately stop reimbursing the nonprofit subrecipient for costs that are unsupported, unallowable, and/or paid to the nonprofit subrecipient’s principal officer or their immediate family member in violation of conflict-of-interest disclosure requirements without obtaining documentation to support they comply with the program’s requirements and take appropriate enforcement actions with the subrecipient in accordance with its contract. 2. Update its written policies and procedures for reviewing and approving subrecipient reimbursement requests to include a process to ensure costs are adequately supported and allowable in accordance with program requirements. 3. Train personnel responsible for reviewing and approving subrecipient reimbursement requests on how to identify costs that are unallowable under federal regulations. 4. Assess the risk of each subrecipient’s noncompliance and perform the appropriate monitoring procedures based on the assessed risk, such as providing training or technical assistance on program-related matters and performing on-site reviews and selective audits of reimbursed costs for allowability. 5. Ensure subrecipients allocate allowable costs using a reasonable basis, use competitive purchasing standards when procuring goods and services, and disclose in writing to the Division any potential conflicts of interest. The Division may need to provide training and technical assistance to subrecipients that address these compliance areas, including the Division’s obtaining conflict-of-interest disclosures from subrecipients as part of the subaward contract, as an example, or otherwise establishing a communication mechanism for subrecipients to use as such conflicts arise. 6. Continue to work with the nonprofit subrecipient to resolve the $6,754 of unallowable costs, including recovering these monies from the subrecipient and assessing the continued need to use this subrecipient for services. 7. Work with the federal agency to resolve the $6,754 of unallowable costs that it reimbursed, which may involve returning monies to the federal agency. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521). 2 The applicable federal requirements related to allowable costs, competitive purchasing, and conflicts of interest can be found in the Code of Federal Regulations at 2 CFR §§200.112, .318-.327, and Subpart E, and 45 CFR §75.112.
Assistance Listings numbers and names: 93.558 Temporary Assistance for Needy Families 93.558 COVID-19 Temporary Assistance for Needy Families Award numbers and years: 2101AZTANF, October 1, 2020 through September 30, 2021; 2201AZTANF, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Health and Human Services Compliance requirement: Subrecipient monitoring Questioned costs: $6,754 Condition—Contrary to federal regulations and its federal award terms, the Department of Economic Security—Division of Community Assistance and Development (Division) reimbursed 1 nonprofit organization subrecipient for federal program costs totaling $6,754 during fiscal year 2022 that were unsupported, unallowable, and/or paid to 1 of the nonprofit organization’s principal officers or their immediate family member in violation of conflict-of-interest disclosure requirements. Specifically, we reviewed 12 reimbursements that included Temporary Assistance for Needy Family program costs totaling $72,800 for the year and found that the Division reimbursed the subrecipient for: • $4,973 for financial and accounting services that were paid to 1 of the nonprofit organization’s principal officers, who served as the Treasurer, and their company, which was not disclosed as a conflict of interest to the Division as required by the Division’s contract with the subrecipient and federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the Division did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the program’s requirements. We noted that the allocation method used may have resulted in multiple programs being overbilled for these services by up to $5,087. • $1,474 for bookkeeping services that were not adequately supported by sufficiently detailed invoices and a signed, written contract having a specified price rate for the services and terms; therefore, we were unable to verify if the amounts paid were appropriate. Further, the Division reimbursed the Treasurer’s family member, whose bookkeeping services company was not disclosed as a conflict of interest to the Division as required by the Division’s contract with the subrecipient and federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the Division did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the program’s requirements. • $307 for incentive payments to the subrecipient’s Executive Director without documentation to support that it was authorized by an agreement, reasonable for the services performed as provided in the subrecipient’s policies, and consistent with compensation paid for similar work in other activities; therefore, we were unable to verify if the amounts reimbursed by the Division were allowable. Additionally, contrary to federal regulations, the Division had not ensured that the subrecipient implemented its competitive purchasing procedures when procuring the professional services described above, and the subrecipient was unable to provide documentation that it had competitively procured the services. The Temporary Assistance for Needy Family program was audited as a major federal program for the State’s fiscal year 2022 single audit. During the audit, we became aware of the potentially noncompliant 12 reimbursements involving 1 of the Division’s nonprofit subrecipients with which it partners to carry out federal programs, including the Emergency Solutions Grants Program, which was not audited as a major federal program for the State’s fiscal year 2022 single audit. Our review of select reimbursements to this subrecipient resulted in similar findings for the Emergency Solutions Grants Program, Continuum of Care Program, and the State Housing Trust Fund that are described in items 2022 115 and 2022-05, respectively. Effect—The Division’s lack of required monitoring increased the risk that the monies it awarded to a nonprofit organization may not have been spent in accordance with the award terms and program requirements. Further, the Division’s reimbursing the subrecipient for $6,754 of unallowable or unsupported costs and/or costs paid to the nonprofit organization’s principal officer or their immediate family member in violation of conflict-of-interest disclosure requirements resulted in those monies being unavailable to be spent for their intended purpose to provide housing assistance to individuals in need. Consequently, the Division may be required to return these monies to the federal agency in accordance with federal requirements.1 Cause—Although the Division’s subrecipient-monitoring policies and procedures did not require it to obtain from subrecipients documentation supporting charges for personal and contracted professional services to verify allowability when subrecipients requested reimbursement, the policies and procedures required an on-site monitoring visit once every 3 years for each subrecipient in which it reviews a sample of the subrecipient’s personal and professional services charges. However, the Division had not performed an on-site monitoring visit of the nonprofit subrecipient since 2018 because it had not yet resumed all its subrecipient-monitoring activities, such as conducting on-site reviews and providing training and technical assistance, since suspending these activities during the COVID-19 pandemic during fiscal year 2020. In addition, the Division had not properly assessed the subrecipient’s risk of noncompliance with its award contract and program requirements to determine the level of monitoring procedures or training the subrecipient needed. For example, the Division was unaware that the subrecipient had not informed it of a principal officer’s conflicts of interest so that the Division could ensure that the principal officer or their immediate family member were not involved in decision-making related to those conflicts and selectively review the related costs and activities for compliance purposes. Criteria—Federal regulations require the Division to monitor subrecipients and include required procedures for assessing the risk of each subrecipient’s noncompliance and implementing appropriate monitoring procedures to address those risk assessments; verifying single audits were conducted timely, if required; reviewing financial and performance reports; following up on and ensuring corrective action is taken on deficiencies that could potentially affect the program; and issuing management decisions on the results of audit findings or monitoring (2 CFR §§200.332, .339, and .521). Federal regulations provide that monitoring procedures the Division may implement to address a subrecipient’s risk assessment include providing training or technical assistance on program-related matters and performing on-site reviews and selective audits of reimbursed costs (2 CFR §200.332[e]). Further, federal regulations require the Division’s subrecipients to allocate allowable costs using a reasonable basis, to use competitive purchasing standards when procuring goods and services, and to disclose in writing to the Division any potential conflicts of interest.2 Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Division should: 1. Immediately stop reimbursing the nonprofit subrecipient for costs that are unsupported, unallowable, and/or paid to the nonprofit subrecipient’s principal officer or their immediate family member in violation of conflict-of-interest disclosure requirements without obtaining documentation to support they comply with the program’s requirements and take appropriate enforcement actions with the subrecipient in accordance with its contract. 2. Update its written policies and procedures for reviewing and approving subrecipient reimbursement requests to include a process to ensure costs are adequately supported and allowable in accordance with program requirements. 3. Train personnel responsible for reviewing and approving subrecipient reimbursement requests on how to identify costs that are unallowable under federal regulations. 4. Assess the risk of each subrecipient’s noncompliance and perform the appropriate monitoring procedures based on the assessed risk, such as providing training or technical assistance on program-related matters and performing on-site reviews and selective audits of reimbursed costs for allowability. 5. Ensure subrecipients allocate allowable costs using a reasonable basis, use competitive purchasing standards when procuring goods and services, and disclose in writing to the Division any potential conflicts of interest. The Division may need to provide training and technical assistance to subrecipients that address these compliance areas, including the Division’s obtaining conflict-of-interest disclosures from subrecipients as part of the subaward contract, as an example, or otherwise establishing a communication mechanism for subrecipients to use as such conflicts arise. 6. Continue to work with the nonprofit subrecipient to resolve the $6,754 of unallowable costs, including recovering these monies from the subrecipient and assessing the continued need to use this subrecipient for services. 7. Work with the federal agency to resolve the $6,754 of unallowable costs that it reimbursed, which may involve returning monies to the federal agency. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521). 2 The applicable federal requirements related to allowable costs, competitive purchasing, and conflicts of interest can be found in the Code of Federal Regulations at 2 CFR §§200.112, .318-.327, and Subpart E, and 45 CFR §75.112.
Assistance Listings numbers and names: 93.558 Temporary Assistance for Needy Families 93.558 COVID-19 Temporary Assistance for Needy Families Award numbers and years: 2101AZTANF, October 1, 2020 through September 30, 2021; 2201AZTANF, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Health and Human Services Compliance requirement: Subrecipient monitoring Questioned costs: $6,754 Condition—Contrary to federal regulations and its federal award terms, the Department of Economic Security—Division of Community Assistance and Development (Division) reimbursed 1 nonprofit organization subrecipient for federal program costs totaling $6,754 during fiscal year 2022 that were unsupported, unallowable, and/or paid to 1 of the nonprofit organization’s principal officers or their immediate family member in violation of conflict-of-interest disclosure requirements. Specifically, we reviewed 12 reimbursements that included Temporary Assistance for Needy Family program costs totaling $72,800 for the year and found that the Division reimbursed the subrecipient for: • $4,973 for financial and accounting services that were paid to 1 of the nonprofit organization’s principal officers, who served as the Treasurer, and their company, which was not disclosed as a conflict of interest to the Division as required by the Division’s contract with the subrecipient and federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the Division did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the program’s requirements. We noted that the allocation method used may have resulted in multiple programs being overbilled for these services by up to $5,087. • $1,474 for bookkeeping services that were not adequately supported by sufficiently detailed invoices and a signed, written contract having a specified price rate for the services and terms; therefore, we were unable to verify if the amounts paid were appropriate. Further, the Division reimbursed the Treasurer’s family member, whose bookkeeping services company was not disclosed as a conflict of interest to the Division as required by the Division’s contract with the subrecipient and federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the Division did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the program’s requirements. • $307 for incentive payments to the subrecipient’s Executive Director without documentation to support that it was authorized by an agreement, reasonable for the services performed as provided in the subrecipient’s policies, and consistent with compensation paid for similar work in other activities; therefore, we were unable to verify if the amounts reimbursed by the Division were allowable. Additionally, contrary to federal regulations, the Division had not ensured that the subrecipient implemented its competitive purchasing procedures when procuring the professional services described above, and the subrecipient was unable to provide documentation that it had competitively procured the services. The Temporary Assistance for Needy Family program was audited as a major federal program for the State’s fiscal year 2022 single audit. During the audit, we became aware of the potentially noncompliant 12 reimbursements involving 1 of the Division’s nonprofit subrecipients with which it partners to carry out federal programs, including the Emergency Solutions Grants Program, which was not audited as a major federal program for the State’s fiscal year 2022 single audit. Our review of select reimbursements to this subrecipient resulted in similar findings for the Emergency Solutions Grants Program, Continuum of Care Program, and the State Housing Trust Fund that are described in items 2022 115 and 2022-05, respectively. Effect—The Division’s lack of required monitoring increased the risk that the monies it awarded to a nonprofit organization may not have been spent in accordance with the award terms and program requirements. Further, the Division’s reimbursing the subrecipient for $6,754 of unallowable or unsupported costs and/or costs paid to the nonprofit organization’s principal officer or their immediate family member in violation of conflict-of-interest disclosure requirements resulted in those monies being unavailable to be spent for their intended purpose to provide housing assistance to individuals in need. Consequently, the Division may be required to return these monies to the federal agency in accordance with federal requirements.1 Cause—Although the Division’s subrecipient-monitoring policies and procedures did not require it to obtain from subrecipients documentation supporting charges for personal and contracted professional services to verify allowability when subrecipients requested reimbursement, the policies and procedures required an on-site monitoring visit once every 3 years for each subrecipient in which it reviews a sample of the subrecipient’s personal and professional services charges. However, the Division had not performed an on-site monitoring visit of the nonprofit subrecipient since 2018 because it had not yet resumed all its subrecipient-monitoring activities, such as conducting on-site reviews and providing training and technical assistance, since suspending these activities during the COVID-19 pandemic during fiscal year 2020. In addition, the Division had not properly assessed the subrecipient’s risk of noncompliance with its award contract and program requirements to determine the level of monitoring procedures or training the subrecipient needed. For example, the Division was unaware that the subrecipient had not informed it of a principal officer’s conflicts of interest so that the Division could ensure that the principal officer or their immediate family member were not involved in decision-making related to those conflicts and selectively review the related costs and activities for compliance purposes. Criteria—Federal regulations require the Division to monitor subrecipients and include required procedures for assessing the risk of each subrecipient’s noncompliance and implementing appropriate monitoring procedures to address those risk assessments; verifying single audits were conducted timely, if required; reviewing financial and performance reports; following up on and ensuring corrective action is taken on deficiencies that could potentially affect the program; and issuing management decisions on the results of audit findings or monitoring (2 CFR §§200.332, .339, and .521). Federal regulations provide that monitoring procedures the Division may implement to address a subrecipient’s risk assessment include providing training or technical assistance on program-related matters and performing on-site reviews and selective audits of reimbursed costs (2 CFR §200.332[e]). Further, federal regulations require the Division’s subrecipients to allocate allowable costs using a reasonable basis, to use competitive purchasing standards when procuring goods and services, and to disclose in writing to the Division any potential conflicts of interest.2 Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Division should: 1. Immediately stop reimbursing the nonprofit subrecipient for costs that are unsupported, unallowable, and/or paid to the nonprofit subrecipient’s principal officer or their immediate family member in violation of conflict-of-interest disclosure requirements without obtaining documentation to support they comply with the program’s requirements and take appropriate enforcement actions with the subrecipient in accordance with its contract. 2. Update its written policies and procedures for reviewing and approving subrecipient reimbursement requests to include a process to ensure costs are adequately supported and allowable in accordance with program requirements. 3. Train personnel responsible for reviewing and approving subrecipient reimbursement requests on how to identify costs that are unallowable under federal regulations. 4. Assess the risk of each subrecipient’s noncompliance and perform the appropriate monitoring procedures based on the assessed risk, such as providing training or technical assistance on program-related matters and performing on-site reviews and selective audits of reimbursed costs for allowability. 5. Ensure subrecipients allocate allowable costs using a reasonable basis, use competitive purchasing standards when procuring goods and services, and disclose in writing to the Division any potential conflicts of interest. The Division may need to provide training and technical assistance to subrecipients that address these compliance areas, including the Division’s obtaining conflict-of-interest disclosures from subrecipients as part of the subaward contract, as an example, or otherwise establishing a communication mechanism for subrecipients to use as such conflicts arise. 6. Continue to work with the nonprofit subrecipient to resolve the $6,754 of unallowable costs, including recovering these monies from the subrecipient and assessing the continued need to use this subrecipient for services. 7. Work with the federal agency to resolve the $6,754 of unallowable costs that it reimbursed, which may involve returning monies to the federal agency. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521). 2 The applicable federal requirements related to allowable costs, competitive purchasing, and conflicts of interest can be found in the Code of Federal Regulations at 2 CFR §§200.112, .318-.327, and Subpart E, and 45 CFR §75.112.
CRITERIA/SPECIFIC REQUIREMENT: The Code of Federal Regulations (Code) (2 CFR § 200.332 (a)) requires the Regional Office of Education No. 39 (ROE) to ensure that every subaward is clearly identified to the subrecipient as a subaward and include information to comply with federal statutes, regulations, and the terms and conditions of the award. The required information includes the subrecipient’s name and unique entity identifier, assistance listing number, federal award date, federal awarding agency, etc. When some of this information is not available, the pass-through entity shall provide the best information available to describe the Federal award. The Code (2 CFR § 200.332 (f)) requires the ROE to verify every subrecipient is audited as required by Subpart F when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR § 200.501. The Code (2 CFR § 200.332 (d)) requires the ROE to monitor the activities of the subrecipient to ensure the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. The Code (2 CFR §200.303 (a)) requires the ROE to establish and maintain effective internal control over the federal award to provide reasonable assurance the ROE is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures over subrecipient monitoring. CONDITION: The ROE did not have adequate controls over subrecipient monitoring in compliance with the Code. CONTEXT: During our testing of four subrecipients, we noted the following: • The ROE did not communicate the required federal award information to all (100%) subrecipients to comply with federal statutes, regulations, and the terms and conditions at the start of the award. All the subaward agreements were signed and became effective after the start date of the grant. • The ROE did not verify whether subrecipients were required to be audited or not. • The ROE did not have written policies and procedures for subrecipient monitoring and could not provide evidence the ROE monitored its subrecipients during the audit period. EFFECT: Lack of controls over subrecipient monitoring may result in subrecipients not properly administering the federal programs in accordance with federal regulations. CAUSE: ROE management indicated this was due to oversight and staffing limitations. RECOMMENDATION: We recommend the ROE establish and implement procedures over subrecipient monitoring. MANAGEMENT’S RESPONSE: The ROE agrees with this finding. The ROE did communicate federal award information to all subrecipients but failed to get the signature of Regional Office of Education No. 17 documenting their decline of the federal award and preference for ROE to manage the funds and services for their area.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of the Treasury (Treasury) Program Name: COVID-19 – Homeowner Assistance Fund ALN and Program Expenditures: 21.026 ($209,795,189) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Subrecipient Monitoring Finding 2022-004: Failure to Establish Subrecipient Monitoring Procedures Type of Finding: Adverse opinion and material weaknessCondition Found: IDHS did not perform a risk assessment or subrecipient monitoring procedures for the subrecipient of the COVID-19 – Homeowner Assistance Fund (HAF) program for the year ended June 30, 2022. The State designated IDHS as the State agency responsible for monitoring of the HAF program subrecipient, Illinois Housing Development Authority (IHDA), a discretely presented component unit of the State. As a pass-through entity, IDHS was responsible for: • Identifying the award and applicable requirements, • Evaluating IHDA’s risk of noncompliance for purposes of determining the appropriate monitoring procedures related to the subaward, • Monitoring the activities of IHDA as necessary to ensure the subaward is used for authorized purposes, IHDA complies with the terms and conditions of the subaward, and IHDA achieves performance goals, and • Issuing a management decision for audit findings pertaining to the federal award provided to IHDA, if applicable. During our testing, we noted IDHS did not perform any subrecipient monitoring procedures over IHDA with respect to the HAF program during the year ended June 30, 2022. Amounts passed through to IHDA totaled $209,795,189 for the year ended June 30, 2022. Criteria or Requirement: According to 2 CFR 200.332(b), a pass-through entity must evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. 2 CFR 200.332(d)(3) requires pass-through entities to issue management decisions for applicableaudit findings pertaining to the federal awards provided to the subrecipient and 2 CFR 200.332(d)(4) requires pass through entities to resolve audit findings through corrective action plans (CAP). In addition, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include establishing and performing monitoring procedures in accordance with Uniform Guidance and program requirements. Cause: In discussing these conditions with IDHS officials, management stated this program is administered in collaboration with the Illinois Department of Revenue, the Illinois Emergency Management Agency (IEMA), the Governor’s Office of Management and Budget, and the Illinois Housing Development Authority (a component unit of the State). Delays encountered in launching the program resulted in a delay in executing interagency agreements to establish roles and responsibilities for the program. Possible Asserted Effect: Failure to perform required risk assessments and to adequately monitor subrecipients may result in the subrecipient not properly administering the federal program in accordance with laws, regulations, and the grant agreement. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-004) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS implement subrecipient monitoring procedures in accordance with federal regulations. Views of IDHS Officials: IDHS accepts the recommendation. IDHS has subrecipient monitoring procedures and has kicked off subrecipient monitoring with IHDA on the Homeowners Assistance Fund program.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families Cluster CCDF Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 93.558 ($585,590,187) 93.575/93.596 ($910,712,554) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Subrecipient Monitoring Finding 2022-008: Failure to Follow Established Program Subrecipient Monitoring Procedures Type of Finding: Material noncompliance and material weakness Condition Found: IDHS did not follow its established program monitoring policies and procedures for subrecipients of the Temporary Assistance for Needy Families (TANF) Cluster, CCDF Cluster (Child Care), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. IDHS has implemented procedures whereby program staff perform periodic program on-site and desk reviews of IDHS subrecipient compliance with regulations applicable to the federal programs administered by IDHS. Generally, these reviews are formally documented and include the issuance of a report of the review results to the subrecipient summarizing the procedures performed, results of the procedures, and any findings or observations for improvement noted. IDHS’s policies require the subrecipient to respond to each finding by providing a written corrective action plan. Additionally, IDHS program staff perform reviews of expenditure reports submitted by subrecipients. IDHS subrecipient monitoring procedures are subject to the review and approval of a supervisor. During our test work over program on-site review procedures performed for 59 subrecipients of the TANF Cluster, CCDF Cluster, and SAPT programs, we noted IDHS did not follow its established program monitoring procedures as follows: IDHS did not provide timely notification (within 60 days) of the results of the programmatic onsite reviews. We noted the following exceptions: IDHS did not complete their quality review on a timely basis (within 60 days). We noted the following exceptions: Additionally, for 1 of 28 SAPT subrecipient expenditures sampled, IDHS could not provide supporting documentation that reconciled to the sampled amount. IDHS’s subrecipient expenditures under the federal programs for the year ended June 30, 2022 were approximately as follows: Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. According to 2 CFR 200.332(b), a pass-through entity must evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include ensuring on-site program procedures and expenditure reviews are performed in a timely manner and adequate documentation is maintained. Cause: In discussing these conditions with IDHS officials, management stated that the program monitoring deficiencies noted are due to misplaced or misfiled documentation, untimely monitoring, inadequate staffing, and lack of consistent application in each program division. Possible Asserted Effect: Failure to adequately perform and document program on-site monitoring reviews of subrecipients and notify subrecipients of findings in a timely manner may result in subrecipients not properly administering the Federal programs in accordance with laws, regulations, and the grant agreement. Failure to properly review subrecipient expenditures may result in inaccurate payments or unallowable costs. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2021-017. (Finding Code 2022- 008, 2021-017, 2020-015, 2019-013, 2018-012, 2017-013, 2016-012, 2015-011, 2014-008, 2013-009, 12- 07, 11-09) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS ensure programmatic on-site and expenditure report reviews are performed and documented for subrecipients in accordance with established policies and procedures. In addition, we recommend IDHS review its process for reporting and following up on program findings relative to subrecipient on-site reviews to ensure timely corrective action and quality control is taken. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will seek to ensure programmatic monitoring reviews are performed and accurately documented for subrecipients in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families Cluster CCDF Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 93.558 ($585,590,187) 93.575/93.596 ($910,712,554) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Subrecipient Monitoring Finding 2022-008: Failure to Follow Established Program Subrecipient Monitoring Procedures Type of Finding: Material noncompliance and material weakness Condition Found: IDHS did not follow its established program monitoring policies and procedures for subrecipients of the Temporary Assistance for Needy Families (TANF) Cluster, CCDF Cluster (Child Care), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. IDHS has implemented procedures whereby program staff perform periodic program on-site and desk reviews of IDHS subrecipient compliance with regulations applicable to the federal programs administered by IDHS. Generally, these reviews are formally documented and include the issuance of a report of the review results to the subrecipient summarizing the procedures performed, results of the procedures, and any findings or observations for improvement noted. IDHS’s policies require the subrecipient to respond to each finding by providing a written corrective action plan. Additionally, IDHS program staff perform reviews of expenditure reports submitted by subrecipients. IDHS subrecipient monitoring procedures are subject to the review and approval of a supervisor. During our test work over program on-site review procedures performed for 59 subrecipients of the TANF Cluster, CCDF Cluster, and SAPT programs, we noted IDHS did not follow its established program monitoring procedures as follows: IDHS did not provide timely notification (within 60 days) of the results of the programmatic onsite reviews. We noted the following exceptions: IDHS did not complete their quality review on a timely basis (within 60 days). We noted the following exceptions: Additionally, for 1 of 28 SAPT subrecipient expenditures sampled, IDHS could not provide supporting documentation that reconciled to the sampled amount. IDHS’s subrecipient expenditures under the federal programs for the year ended June 30, 2022 were approximately as follows: Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. According to 2 CFR 200.332(b), a pass-through entity must evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include ensuring on-site program procedures and expenditure reviews are performed in a timely manner and adequate documentation is maintained. Cause: In discussing these conditions with IDHS officials, management stated that the program monitoring deficiencies noted are due to misplaced or misfiled documentation, untimely monitoring, inadequate staffing, and lack of consistent application in each program division. Possible Asserted Effect: Failure to adequately perform and document program on-site monitoring reviews of subrecipients and notify subrecipients of findings in a timely manner may result in subrecipients not properly administering the Federal programs in accordance with laws, regulations, and the grant agreement. Failure to properly review subrecipient expenditures may result in inaccurate payments or unallowable costs. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2021-017. (Finding Code 2022- 008, 2021-017, 2020-015, 2019-013, 2018-012, 2017-013, 2016-012, 2015-011, 2014-008, 2013-009, 12- 07, 11-09) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS ensure programmatic on-site and expenditure report reviews are performed and documented for subrecipients in accordance with established policies and procedures. In addition, we recommend IDHS review its process for reporting and following up on program findings relative to subrecipient on-site reviews to ensure timely corrective action and quality control is taken. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will seek to ensure programmatic monitoring reviews are performed and accurately documented for subrecipients in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families Cluster CCDF Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 93.558 ($585,590,187) 93.575/93.596 ($910,712,554) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Subrecipient Monitoring Finding 2022-008: Failure to Follow Established Program Subrecipient Monitoring Procedures Type of Finding: Material noncompliance and material weakness Condition Found: IDHS did not follow its established program monitoring policies and procedures for subrecipients of the Temporary Assistance for Needy Families (TANF) Cluster, CCDF Cluster (Child Care), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. IDHS has implemented procedures whereby program staff perform periodic program on-site and desk reviews of IDHS subrecipient compliance with regulations applicable to the federal programs administered by IDHS. Generally, these reviews are formally documented and include the issuance of a report of the review results to the subrecipient summarizing the procedures performed, results of the procedures, and any findings or observations for improvement noted. IDHS’s policies require the subrecipient to respond to each finding by providing a written corrective action plan. Additionally, IDHS program staff perform reviews of expenditure reports submitted by subrecipients. IDHS subrecipient monitoring procedures are subject to the review and approval of a supervisor. During our test work over program on-site review procedures performed for 59 subrecipients of the TANF Cluster, CCDF Cluster, and SAPT programs, we noted IDHS did not follow its established program monitoring procedures as follows: IDHS did not provide timely notification (within 60 days) of the results of the programmatic onsite reviews. We noted the following exceptions: IDHS did not complete their quality review on a timely basis (within 60 days). We noted the following exceptions: Additionally, for 1 of 28 SAPT subrecipient expenditures sampled, IDHS could not provide supporting documentation that reconciled to the sampled amount. IDHS’s subrecipient expenditures under the federal programs for the year ended June 30, 2022 were approximately as follows: Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. According to 2 CFR 200.332(b), a pass-through entity must evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include ensuring on-site program procedures and expenditure reviews are performed in a timely manner and adequate documentation is maintained. Cause: In discussing these conditions with IDHS officials, management stated that the program monitoring deficiencies noted are due to misplaced or misfiled documentation, untimely monitoring, inadequate staffing, and lack of consistent application in each program division. Possible Asserted Effect: Failure to adequately perform and document program on-site monitoring reviews of subrecipients and notify subrecipients of findings in a timely manner may result in subrecipients not properly administering the Federal programs in accordance with laws, regulations, and the grant agreement. Failure to properly review subrecipient expenditures may result in inaccurate payments or unallowable costs. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2021-017. (Finding Code 2022- 008, 2021-017, 2020-015, 2019-013, 2018-012, 2017-013, 2016-012, 2015-011, 2014-008, 2013-009, 12- 07, 11-09) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS ensure programmatic on-site and expenditure report reviews are performed and documented for subrecipients in accordance with established policies and procedures. In addition, we recommend IDHS review its process for reporting and following up on program findings relative to subrecipient on-site reviews to ensure timely corrective action and quality control is taken. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will seek to ensure programmatic monitoring reviews are performed and accurately documented for subrecipients in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families Cluster CCDF Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 93.558 ($585,590,187) 93.575/93.596 ($910,712,554) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Subrecipient Monitoring Finding 2022-008: Failure to Follow Established Program Subrecipient Monitoring Procedures Type of Finding: Material noncompliance and material weakness Condition Found: IDHS did not follow its established program monitoring policies and procedures for subrecipients of the Temporary Assistance for Needy Families (TANF) Cluster, CCDF Cluster (Child Care), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. IDHS has implemented procedures whereby program staff perform periodic program on-site and desk reviews of IDHS subrecipient compliance with regulations applicable to the federal programs administered by IDHS. Generally, these reviews are formally documented and include the issuance of a report of the review results to the subrecipient summarizing the procedures performed, results of the procedures, and any findings or observations for improvement noted. IDHS’s policies require the subrecipient to respond to each finding by providing a written corrective action plan. Additionally, IDHS program staff perform reviews of expenditure reports submitted by subrecipients. IDHS subrecipient monitoring procedures are subject to the review and approval of a supervisor. During our test work over program on-site review procedures performed for 59 subrecipients of the TANF Cluster, CCDF Cluster, and SAPT programs, we noted IDHS did not follow its established program monitoring procedures as follows: IDHS did not provide timely notification (within 60 days) of the results of the programmatic onsite reviews. We noted the following exceptions: IDHS did not complete their quality review on a timely basis (within 60 days). We noted the following exceptions: Additionally, for 1 of 28 SAPT subrecipient expenditures sampled, IDHS could not provide supporting documentation that reconciled to the sampled amount. IDHS’s subrecipient expenditures under the federal programs for the year ended June 30, 2022 were approximately as follows: Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. According to 2 CFR 200.332(b), a pass-through entity must evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include ensuring on-site program procedures and expenditure reviews are performed in a timely manner and adequate documentation is maintained. Cause: In discussing these conditions with IDHS officials, management stated that the program monitoring deficiencies noted are due to misplaced or misfiled documentation, untimely monitoring, inadequate staffing, and lack of consistent application in each program division. Possible Asserted Effect: Failure to adequately perform and document program on-site monitoring reviews of subrecipients and notify subrecipients of findings in a timely manner may result in subrecipients not properly administering the Federal programs in accordance with laws, regulations, and the grant agreement. Failure to properly review subrecipient expenditures may result in inaccurate payments or unallowable costs. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2021-017. (Finding Code 2022- 008, 2021-017, 2020-015, 2019-013, 2018-012, 2017-013, 2016-012, 2015-011, 2014-008, 2013-009, 12- 07, 11-09) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS ensure programmatic on-site and expenditure report reviews are performed and documented for subrecipients in accordance with established policies and procedures. In addition, we recommend IDHS review its process for reporting and following up on program findings relative to subrecipient on-site reviews to ensure timely corrective action and quality control is taken. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will seek to ensure programmatic monitoring reviews are performed and accurately documented for subrecipients in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families Cluster CCDF Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 93.558 ($585,590,187) 93.575/93.596 ($910,712,554) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Subrecipient Monitoring Finding 2022-008: Failure to Follow Established Program Subrecipient Monitoring Procedures Type of Finding: Material noncompliance and material weakness Condition Found: IDHS did not follow its established program monitoring policies and procedures for subrecipients of the Temporary Assistance for Needy Families (TANF) Cluster, CCDF Cluster (Child Care), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. IDHS has implemented procedures whereby program staff perform periodic program on-site and desk reviews of IDHS subrecipient compliance with regulations applicable to the federal programs administered by IDHS. Generally, these reviews are formally documented and include the issuance of a report of the review results to the subrecipient summarizing the procedures performed, results of the procedures, and any findings or observations for improvement noted. IDHS’s policies require the subrecipient to respond to each finding by providing a written corrective action plan. Additionally, IDHS program staff perform reviews of expenditure reports submitted by subrecipients. IDHS subrecipient monitoring procedures are subject to the review and approval of a supervisor. During our test work over program on-site review procedures performed for 59 subrecipients of the TANF Cluster, CCDF Cluster, and SAPT programs, we noted IDHS did not follow its established program monitoring procedures as follows: IDHS did not provide timely notification (within 60 days) of the results of the programmatic onsite reviews. We noted the following exceptions: IDHS did not complete their quality review on a timely basis (within 60 days). We noted the following exceptions: Additionally, for 1 of 28 SAPT subrecipient expenditures sampled, IDHS could not provide supporting documentation that reconciled to the sampled amount. IDHS’s subrecipient expenditures under the federal programs for the year ended June 30, 2022 were approximately as follows: Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. According to 2 CFR 200.332(b), a pass-through entity must evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include ensuring on-site program procedures and expenditure reviews are performed in a timely manner and adequate documentation is maintained. Cause: In discussing these conditions with IDHS officials, management stated that the program monitoring deficiencies noted are due to misplaced or misfiled documentation, untimely monitoring, inadequate staffing, and lack of consistent application in each program division. Possible Asserted Effect: Failure to adequately perform and document program on-site monitoring reviews of subrecipients and notify subrecipients of findings in a timely manner may result in subrecipients not properly administering the Federal programs in accordance with laws, regulations, and the grant agreement. Failure to properly review subrecipient expenditures may result in inaccurate payments or unallowable costs. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2021-017. (Finding Code 2022- 008, 2021-017, 2020-015, 2019-013, 2018-012, 2017-013, 2016-012, 2015-011, 2014-008, 2013-009, 12- 07, 11-09) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS ensure programmatic on-site and expenditure report reviews are performed and documented for subrecipients in accordance with established policies and procedures. In addition, we recommend IDHS review its process for reporting and following up on program findings relative to subrecipient on-site reviews to ensure timely corrective action and quality control is taken. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will seek to ensure programmatic monitoring reviews are performed and accurately documented for subrecipients in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Health and Human Services (USDHHS) Program Name: Temporary Assistance for Needy Families Cluster CCDF Cluster Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 93.558 ($585,590,187) 93.575/93.596 ($910,712,554) 93.959 ($81,408,580) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Subrecipient Monitoring Finding 2022-008: Failure to Follow Established Program Subrecipient Monitoring Procedures Type of Finding: Material noncompliance and material weakness Condition Found: IDHS did not follow its established program monitoring policies and procedures for subrecipients of the Temporary Assistance for Needy Families (TANF) Cluster, CCDF Cluster (Child Care), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs. IDHS has implemented procedures whereby program staff perform periodic program on-site and desk reviews of IDHS subrecipient compliance with regulations applicable to the federal programs administered by IDHS. Generally, these reviews are formally documented and include the issuance of a report of the review results to the subrecipient summarizing the procedures performed, results of the procedures, and any findings or observations for improvement noted. IDHS’s policies require the subrecipient to respond to each finding by providing a written corrective action plan. Additionally, IDHS program staff perform reviews of expenditure reports submitted by subrecipients. IDHS subrecipient monitoring procedures are subject to the review and approval of a supervisor. During our test work over program on-site review procedures performed for 59 subrecipients of the TANF Cluster, CCDF Cluster, and SAPT programs, we noted IDHS did not follow its established program monitoring procedures as follows: IDHS did not provide timely notification (within 60 days) of the results of the programmatic onsite reviews. We noted the following exceptions: IDHS did not complete their quality review on a timely basis (within 60 days). We noted the following exceptions: Additionally, for 1 of 28 SAPT subrecipient expenditures sampled, IDHS could not provide supporting documentation that reconciled to the sampled amount. IDHS’s subrecipient expenditures under the federal programs for the year ended June 30, 2022 were approximately as follows: Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. According to 2 CFR 200.332(b), a pass-through entity must evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include ensuring on-site program procedures and expenditure reviews are performed in a timely manner and adequate documentation is maintained. Cause: In discussing these conditions with IDHS officials, management stated that the program monitoring deficiencies noted are due to misplaced or misfiled documentation, untimely monitoring, inadequate staffing, and lack of consistent application in each program division. Possible Asserted Effect: Failure to adequately perform and document program on-site monitoring reviews of subrecipients and notify subrecipients of findings in a timely manner may result in subrecipients not properly administering the Federal programs in accordance with laws, regulations, and the grant agreement. Failure to properly review subrecipient expenditures may result in inaccurate payments or unallowable costs. Repeat Finding: A similar finding was reported in the prior year audit as finding number 2021-017. (Finding Code 2022- 008, 2021-017, 2020-015, 2019-013, 2018-012, 2017-013, 2016-012, 2015-011, 2014-008, 2013-009, 12- 07, 11-09) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS ensure programmatic on-site and expenditure report reviews are performed and documented for subrecipients in accordance with established policies and procedures. In addition, we recommend IDHS review its process for reporting and following up on program findings relative to subrecipient on-site reviews to ensure timely corrective action and quality control is taken. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will seek to ensure programmatic monitoring reviews are performed and accurately documented for subrecipients in accordance with established policies and procedures.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Treasury Department (TREAS) Program Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds ALN and Program Expenditures: 21.027 ($4,895,262,395) Award Numbers: Various – See schedule of award numbers Federal Award Year: Various – See schedule of award numbers Questioned Costs: Cannot be determined Compliance Requirement: Subrecipient Monitoring Finding 2022-012: Failure to Notify Subrecipients of Federal Funding Type of Finding: Noncompliance and material weakness Condition Found: IDHS did not communicate required federal program information to subrecipients at the time of disbursement for the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program. During our testing of 43 SLFRF subrecipient payments, we noted IDHS did not communicate the Assistance Listing Number (ALN) at the time of disbursement for 15 of the subrecipients tested. Amounts passed through to subrecipients by IDHS under the SLFRF program totaled $60,364,704 during the year ended June 30, 2022. Amounts passed through to subrecipients by the State under the SLFRF program totaled $336,176,469 during the year ended June 30, 2022. Criteria or Requirement: Per 2 CFR 200.332(a)(1)(xii), all pass-through entities must identify the dollar amount made available under each Federal award and the ALN at the time of disbursement. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include controls to ensure ALN notifications are made at the time of subrecipient disbursement. Cause: In discussing these conditions with IDHS officials, management stated some staff were not aware of the requirement to notify subrecipients of ALNs at the time of disbursement. Possible Asserted Effect: Failure to communicate ALNs at the time of disbursement can hamper the subrecipient’s ability to correctly prepare their schedule of expenditures of federal awards. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2022-012) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS add to their warrant description the ALN for each disbursement made to subrecipients. Views of IDHS Officials: IDHS accepts the recommendation. IDHS will work to ensure that the description of the Assistance Listing Numbers (ALN) is properly communicated to subrecipients at the time of disbursement.