Criteria Pursuant to Title 2, Subtitle A Chapter II, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), “a non-Federal entity may concurrently receive Federal awards as a recipient, subrecipient, and a contractor, depending on the substance of its agreements with the Federal awarding agencies and pass-through entities. Therefore, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.” Condition We noted that the Organization did not make case-by-case determinations of each agreement with parties to which the Organization passed through Federal program funds to determine whether they were deemed to be either subrecipients or contractors. Cause Management had not updated its policies and procedures to incorporate the relevant Uniform Guidance subrecipient monitoring and management policies. Effect The lack of subrecipient monitoring and management policies of the Uniform Guidance could result in noncompliance by the Organization with the stipulated requirements for pass-through entities, as well as noncompliance of subrecipient requirements by the entities receiving the pass-through funds from the Organization. Recommendation We recommend that the Organization incorporate the subrecipient monitoring and management provisions of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance to their policies and procedures manual to ensure compliance with Federal standards. Views of Responsible Officials and Planned Corrective Action The Organization concurs with the recommendation. As part of our current policies and procedures review and revision process, we plan to incorporate the subrecipient monitoring and management provision of 2 CFR§ 200.331 and 2 CFR §200.332 of the Uniform Guidance to emphasize accountability and compliance in managing federal funds and subrecipients. Specifically and prospectively, effective November 1, 2024, the Organization’s practices will include: 1. Using a checklist for the determination of subrecipient or contractor classification as guidance, perform a comprehensive risk assessment before entering into any subrecipient agreement. 2. Provide identification details such as CFDA number, amount of federal funds obligated, and the award period for determined subrecipient awards. 3. Require subrecipients to submit programmatic and financial reports as specified in the subrecipient agreement. 4. As part of the subrecipient process, ensure subrecipients that expend $750,000 or more in federal funds during a fiscal year undergo a single audit in accordance with 2 CFR Part 200, Subpart F. Review their audit reports and address any findings related to their federal awards, taking appropriate corrective actions. Retroactively, for the audit periods July 1, 2022 – June 30, 2023 and July 1, 2023 – June 30, 2024, the Organization will perform a risk assessment of the existing subrecipient portfolio during this period to identify high-priority risks. The objective of this risk assessment review is to identify, evaluate, and prioritize risks that could adversely impact the Organization’s ability to achieve its strategic, operational, and quality assurance goals, ensuring that all products, services, and processes align with established standards and fulfill processes. The above reflects the current planned practices of the Organization and the overall financial policies and procedures are in the process of being updated to align to the subrecipient monitoring and management provision of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance. The Organization has prioritized the completion and distribution of the updated financial policies and procedures by December 31, 2024.
Criteria Pursuant to Title 2, Subtitle A Chapter II, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), “a non-Federal entity may concurrently receive Federal awards as a recipient, subrecipient, and a contractor, depending on the substance of its agreements with the Federal awarding agencies and pass-through entities. Therefore, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.” Condition We noted that the Organization did not make case-by-case determinations of each agreement with parties to which the Organization passed through Federal program funds to determine whether they were deemed to be either subrecipients or contractors. Cause Management had not updated its policies and procedures to incorporate the relevant Uniform Guidance subrecipient monitoring and management policies. Effect The lack of subrecipient monitoring and management policies of the Uniform Guidance could result in noncompliance by the Organization with the stipulated requirements for pass-through entities, as well as noncompliance of subrecipient requirements by the entities receiving the pass-through funds from the Organization. Recommendation We recommend that the Organization incorporate the subrecipient monitoring and management provisions of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance to their policies and procedures manual to ensure compliance with Federal standards. Views of Responsible Officials and Planned Corrective Action The Organization concurs with the recommendation. As part of our current policies and procedures review and revision process, we plan to incorporate the subrecipient monitoring and management provision of 2 CFR§ 200.331 and 2 CFR §200.332 of the Uniform Guidance to emphasize accountability and compliance in managing federal funds and subrecipients. Specifically and prospectively, effective November 1, 2024, the Organization’s practices will include: 1. Using a checklist for the determination of subrecipient or contractor classification as guidance, perform a comprehensive risk assessment before entering into any subrecipient agreement. 2. Provide identification details such as CFDA number, amount of federal funds obligated, and the award period for determined subrecipient awards. 3. Require subrecipients to submit programmatic and financial reports as specified in the subrecipient agreement. 4. As part of the subrecipient process, ensure subrecipients that expend $750,000 or more in federal funds during a fiscal year undergo a single audit in accordance with 2 CFR Part 200, Subpart F. Review their audit reports and address any findings related to their federal awards, taking appropriate corrective actions. Retroactively, for the audit periods July 1, 2022 – June 30, 2023 and July 1, 2023 – June 30, 2024, the Organization will perform a risk assessment of the existing subrecipient portfolio during this period to identify high-priority risks. The objective of this risk assessment review is to identify, evaluate, and prioritize risks that could adversely impact the Organization’s ability to achieve its strategic, operational, and quality assurance goals, ensuring that all products, services, and processes align with established standards and fulfill processes. The above reflects the current planned practices of the Organization and the overall financial policies and procedures are in the process of being updated to align to the subrecipient monitoring and management provision of 2 CFR §200.331 and 2 CFR §200.332 of the Uniform Guidance. The Organization has prioritized the completion and distribution of the updated financial policies and procedures by December 31, 2024.
2 CFR § 2900.4 gives regulatory effect to the U.S. Department of Labor for 2 CFR § 200.332(a)(3) which requires a pass-through entity to impose any additional requirements on the subrecipient necessary in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Additionally, Ohio Admin. Code 5101:9-7-29 (D)(2)(c) requires WIOA local area fiscal agents to submit the completed quarterly financial statement to the Bureau of County Finance and Technical Assistance (BCFTA) no later than the tenth calendar day of the second month following the quarter the report represents. Ohio Admin. Code § 5101:9-7-29(D)(1)(b)(i) further requires the fiscal agent, when reviewing the quarterly financial data, to reconcile any difference between the WIOA local area's financial records and financial data submitted to BCFTA via CFIS. Ohio Admin Code § 5101:9-7-04(E) states in part that as expenditures are incurred, they become accrued expenses and shall be reported as accruals. Ohio Admin Code § 5101:9-7-04(F) provides that the WIOA local area shall maintain documentation in accordance with the records retention requirements in rule 5101:9-9-21 of the Administrative Code. This documentation may be subject to inspection, monitoring, and audit by ODJFS and the Ohio auditor of state. Due to the lack of effect control procedures over reporting, the following issues were noted related to the quarterly submissions: 1. The quarterly financial certification for the third quarter of calendar year 2021 was not filed until December 1, 2021, the fourth quarter of calendar year 2021 was not filed until February 14, 2022, the second quarter of calendar year 2022 was not filed until August 12, 2022, the third quarter of calendar year 2022 was not filed until November 16, 2022, the fourth quarter of calendar year 2022 was not filed until February 13, 2023. These were considered late filings. 2. The fiscal agent did not maintain quarterly certification on file for the first quarter of calendar year 2022. Copies had to be obtained from CFIS and those copies were not the originals signed by approving authorities. 3. For all submissions, the fiscal agent was unable to provide system reports from their accounting system that reconciled to the actual financial data (i.e. beginning balances, revenues, expenses, ending balances) submitted to BCFTA via CFIS. 4. For all submissions, the fiscal agent was unable to provide any support for the amounts they reported as accruals on the certifications. 5. The ending balance reported on the quarterly financial certification for the second quarter of calendar year 2022 did not agree to the beginning balance reported for the third quarter of calendar year 2022, the ending balance reported on the quarterly financial certification for the second quarter of calendar year 2021 does not agree to the beginning balance of the third quarter of calendar year 2021, the ending balance reported on the quarterly financial certification for the 4th quarter of calendar year 2021 did not agree to the beginning balance of the first quarter of calendar year 2022. 6. For the fourth quarter of 2021, the month to month beginning and ending balances do not agree. This could lead to questions regarding accuracy of the amounts reported to the Ohio Department of Job and Family Services. The Consortium should develop and implement procedures to ensure quarterly reports are filed no later than the tenth calendar day of the second month following the quarter the report represents. In addition, all data reported thru these quarterly reports should be supported by the accounting system of the Fiscal Agent.
2 CFR § 2900.4 gives regulatory effect to the U.S. Department of Labor for 2 CFR § 200.332(a)(3) which requires a pass-through entity to impose any additional requirements on the subrecipient necessary in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Additionally, Ohio Admin. Code 5101:9-7-29 (D)(2)(c) requires WIOA local area fiscal agents to submit the completed quarterly financial statement to the Bureau of County Finance and Technical Assistance (BCFTA) no later than the tenth calendar day of the second month following the quarter the report represents. Ohio Admin. Code § 5101:9-7-29(D)(1)(b)(i) further requires the fiscal agent, when reviewing the quarterly financial data, to reconcile any difference between the WIOA local area's financial records and financial data submitted to BCFTA via CFIS. Ohio Admin Code § 5101:9-7-04(E) states in part that as expenditures are incurred, they become accrued expenses and shall be reported as accruals. Ohio Admin Code § 5101:9-7-04(F) provides that the WIOA local area shall maintain documentation in accordance with the records retention requirements in rule 5101:9-9-21 of the Administrative Code. This documentation may be subject to inspection, monitoring, and audit by ODJFS and the Ohio auditor of state. Due to the lack of effect control procedures over reporting, the following issues were noted related to the quarterly submissions: 1. The quarterly financial certification for the third quarter of calendar year 2021 was not filed until December 1, 2021, the fourth quarter of calendar year 2021 was not filed until February 14, 2022, the second quarter of calendar year 2022 was not filed until August 12, 2022, the third quarter of calendar year 2022 was not filed until November 16, 2022, the fourth quarter of calendar year 2022 was not filed until February 13, 2023. These were considered late filings. 2. The fiscal agent did not maintain quarterly certification on file for the first quarter of calendar year 2022. Copies had to be obtained from CFIS and those copies were not the originals signed by approving authorities. 3. For all submissions, the fiscal agent was unable to provide system reports from their accounting system that reconciled to the actual financial data (i.e. beginning balances, revenues, expenses, ending balances) submitted to BCFTA via CFIS. 4. For all submissions, the fiscal agent was unable to provide any support for the amounts they reported as accruals on the certifications. 5. The ending balance reported on the quarterly financial certification for the second quarter of calendar year 2022 did not agree to the beginning balance reported for the third quarter of calendar year 2022, the ending balance reported on the quarterly financial certification for the second quarter of calendar year 2021 does not agree to the beginning balance of the third quarter of calendar year 2021, the ending balance reported on the quarterly financial certification for the 4th quarter of calendar year 2021 did not agree to the beginning balance of the first quarter of calendar year 2022. 6. For the fourth quarter of 2021, the month to month beginning and ending balances do not agree. This could lead to questions regarding accuracy of the amounts reported to the Ohio Department of Job and Family Services. The Consortium should develop and implement procedures to ensure quarterly reports are filed no later than the tenth calendar day of the second month following the quarter the report represents. In addition, all data reported thru these quarterly reports should be supported by the accounting system of the Fiscal Agent.
2 CFR § 2900.4 gives regulatory effect to the U.S. Department of Labor for 2 CFR § 200.332(a)(3) which requires a pass-through entity to impose any additional requirements on the subrecipient necessary in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Additionally, Ohio Admin. Code 5101:9-7-29 (D)(2)(c) requires WIOA local area fiscal agents to submit the completed quarterly financial statement to the Bureau of County Finance and Technical Assistance (BCFTA) no later than the tenth calendar day of the second month following the quarter the report represents. Ohio Admin. Code § 5101:9-7-29(D)(1)(b)(i) further requires the fiscal agent, when reviewing the quarterly financial data, to reconcile any difference between the WIOA local area's financial records and financial data submitted to BCFTA via CFIS. Ohio Admin Code § 5101:9-7-04(E) states in part that as expenditures are incurred, they become accrued expenses and shall be reported as accruals. Ohio Admin Code § 5101:9-7-04(F) provides that the WIOA local area shall maintain documentation in accordance with the records retention requirements in rule 5101:9-9-21 of the Administrative Code. This documentation may be subject to inspection, monitoring, and audit by ODJFS and the Ohio auditor of state. Due to the lack of effect control procedures over reporting, the following issues were noted related to the quarterly submissions: 1. The quarterly financial certification for the third quarter of calendar year 2021 was not filed until December 1, 2021, the fourth quarter of calendar year 2021 was not filed until February 14, 2022, the second quarter of calendar year 2022 was not filed until August 12, 2022, the third quarter of calendar year 2022 was not filed until November 16, 2022, the fourth quarter of calendar year 2022 was not filed until February 13, 2023. These were considered late filings. 2. The fiscal agent did not maintain quarterly certification on file for the first quarter of calendar year 2022. Copies had to be obtained from CFIS and those copies were not the originals signed by approving authorities. 3. For all submissions, the fiscal agent was unable to provide system reports from their accounting system that reconciled to the actual financial data (i.e. beginning balances, revenues, expenses, ending balances) submitted to BCFTA via CFIS. 4. For all submissions, the fiscal agent was unable to provide any support for the amounts they reported as accruals on the certifications. 5. The ending balance reported on the quarterly financial certification for the second quarter of calendar year 2022 did not agree to the beginning balance reported for the third quarter of calendar year 2022, the ending balance reported on the quarterly financial certification for the second quarter of calendar year 2021 does not agree to the beginning balance of the third quarter of calendar year 2021, the ending balance reported on the quarterly financial certification for the 4th quarter of calendar year 2021 did not agree to the beginning balance of the first quarter of calendar year 2022. 6. For the fourth quarter of 2021, the month to month beginning and ending balances do not agree. This could lead to questions regarding accuracy of the amounts reported to the Ohio Department of Job and Family Services. The Consortium should develop and implement procedures to ensure quarterly reports are filed no later than the tenth calendar day of the second month following the quarter the report represents. In addition, all data reported thru these quarterly reports should be supported by the accounting system of the Fiscal Agent.
2 CFR § 2900.4 gives regulatory effect to the U.S. Department of Labor for 2 CFR § 200.332(a)(3) which requires a pass-through entity to impose any additional requirements on the subrecipient necessary in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Additionally, Ohio Admin. Code 5101:9-7-29 (D)(2)(c) requires WIOA local area fiscal agents to submit the completed quarterly financial statement to the Bureau of County Finance and Technical Assistance (BCFTA) no later than the tenth calendar day of the second month following the quarter the report represents. Ohio Admin. Code § 5101:9-7-29(D)(1)(b)(i) further requires the fiscal agent, when reviewing the quarterly financial data, to reconcile any difference between the WIOA local area's financial records and financial data submitted to BCFTA via CFIS. Ohio Admin Code § 5101:9-7-04(E) states in part that as expenditures are incurred, they become accrued expenses and shall be reported as accruals. Ohio Admin Code § 5101:9-7-04(F) provides that the WIOA local area shall maintain documentation in accordance with the records retention requirements in rule 5101:9-9-21 of the Administrative Code. This documentation may be subject to inspection, monitoring, and audit by ODJFS and the Ohio auditor of state. Due to the lack of effect control procedures over reporting, the following issues were noted related to the quarterly submissions: 1. The quarterly financial certification for the third quarter of calendar year 2021 was not filed until December 1, 2021, the fourth quarter of calendar year 2021 was not filed until February 14, 2022, the second quarter of calendar year 2022 was not filed until August 12, 2022, the third quarter of calendar year 2022 was not filed until November 16, 2022, the fourth quarter of calendar year 2022 was not filed until February 13, 2023. These were considered late filings. 2. The fiscal agent did not maintain quarterly certification on file for the first quarter of calendar year 2022. Copies had to be obtained from CFIS and those copies were not the originals signed by approving authorities. 3. For all submissions, the fiscal agent was unable to provide system reports from their accounting system that reconciled to the actual financial data (i.e. beginning balances, revenues, expenses, ending balances) submitted to BCFTA via CFIS. 4. For all submissions, the fiscal agent was unable to provide any support for the amounts they reported as accruals on the certifications. 5. The ending balance reported on the quarterly financial certification for the second quarter of calendar year 2022 did not agree to the beginning balance reported for the third quarter of calendar year 2022, the ending balance reported on the quarterly financial certification for the second quarter of calendar year 2021 does not agree to the beginning balance of the third quarter of calendar year 2021, the ending balance reported on the quarterly financial certification for the 4th quarter of calendar year 2021 did not agree to the beginning balance of the first quarter of calendar year 2022. 6. For the fourth quarter of 2021, the month to month beginning and ending balances do not agree. This could lead to questions regarding accuracy of the amounts reported to the Ohio Department of Job and Family Services. The Consortium should develop and implement procedures to ensure quarterly reports are filed no later than the tenth calendar day of the second month following the quarter the report represents. In addition, all data reported thru these quarterly reports should be supported by the accounting system of the Fiscal Agent.
2 CFR § 2900.4 gives regulatory effect to the U.S. Department of Labor for 2 CFR § 200.332(a)(3) which requires a pass-through entity to impose any additional requirements on the subrecipient necessary in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Additionally, Ohio Admin. Code 5101:9-7-29 (D)(2)(c) requires WIOA local area fiscal agents to submit the completed quarterly financial statement to the Bureau of County Finance and Technical Assistance (BCFTA) no later than the tenth calendar day of the second month following the quarter the report represents. Ohio Admin. Code § 5101:9-7-29(D)(1)(b)(i) further requires the fiscal agent, when reviewing the quarterly financial data, to reconcile any difference between the WIOA local area's financial records and financial data submitted to BCFTA via CFIS. Ohio Admin Code § 5101:9-7-04(E) states in part that as expenditures are incurred, they become accrued expenses and shall be reported as accruals. Ohio Admin Code § 5101:9-7-04(F) provides that the WIOA local area shall maintain documentation in accordance with the records retention requirements in rule 5101:9-9-21 of the Administrative Code. This documentation may be subject to inspection, monitoring, and audit by ODJFS and the Ohio auditor of state. Due to the lack of effect control procedures over reporting, the following issues were noted related to the quarterly submissions: 1. The quarterly financial certification for the third quarter of calendar year 2021 was not filed until December 1, 2021, the fourth quarter of calendar year 2021 was not filed until February 14, 2022, the second quarter of calendar year 2022 was not filed until August 12, 2022, the third quarter of calendar year 2022 was not filed until November 16, 2022, the fourth quarter of calendar year 2022 was not filed until February 13, 2023. These were considered late filings. 2. The fiscal agent did not maintain quarterly certification on file for the first quarter of calendar year 2022. Copies had to be obtained from CFIS and those copies were not the originals signed by approving authorities. 3. For all submissions, the fiscal agent was unable to provide system reports from their accounting system that reconciled to the actual financial data (i.e. beginning balances, revenues, expenses, ending balances) submitted to BCFTA via CFIS. 4. For all submissions, the fiscal agent was unable to provide any support for the amounts they reported as accruals on the certifications. 5. The ending balance reported on the quarterly financial certification for the second quarter of calendar year 2022 did not agree to the beginning balance reported for the third quarter of calendar year 2022, the ending balance reported on the quarterly financial certification for the second quarter of calendar year 2021 does not agree to the beginning balance of the third quarter of calendar year 2021, the ending balance reported on the quarterly financial certification for the 4th quarter of calendar year 2021 did not agree to the beginning balance of the first quarter of calendar year 2022. 6. For the fourth quarter of 2021, the month to month beginning and ending balances do not agree. This could lead to questions regarding accuracy of the amounts reported to the Ohio Department of Job and Family Services. The Consortium should develop and implement procedures to ensure quarterly reports are filed no later than the tenth calendar day of the second month following the quarter the report represents. In addition, all data reported thru these quarterly reports should be supported by the accounting system of the Fiscal Agent.
2 CFR § 2900.4 gives regulatory effect to the U.S. Department of Labor for 2 CFR § 200.332(a)(3) which requires a pass-through entity to impose any additional requirements on the subrecipient necessary in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. Additionally, Ohio Admin. Code 5101:9-7-29 (D)(2)(c) requires WIOA local area fiscal agents to submit the completed quarterly financial statement to the Bureau of County Finance and Technical Assistance (BCFTA) no later than the tenth calendar day of the second month following the quarter the report represents. Ohio Admin. Code § 5101:9-7-29(D)(1)(b)(i) further requires the fiscal agent, when reviewing the quarterly financial data, to reconcile any difference between the WIOA local area's financial records and financial data submitted to BCFTA via CFIS. Ohio Admin Code § 5101:9-7-04(E) states in part that as expenditures are incurred, they become accrued expenses and shall be reported as accruals. Ohio Admin Code § 5101:9-7-04(F) provides that the WIOA local area shall maintain documentation in accordance with the records retention requirements in rule 5101:9-9-21 of the Administrative Code. This documentation may be subject to inspection, monitoring, and audit by ODJFS and the Ohio auditor of state. Due to the lack of effect control procedures over reporting, the following issues were noted related to the quarterly submissions: 1. The quarterly financial certification for the third quarter of calendar year 2021 was not filed until December 1, 2021, the fourth quarter of calendar year 2021 was not filed until February 14, 2022, the second quarter of calendar year 2022 was not filed until August 12, 2022, the third quarter of calendar year 2022 was not filed until November 16, 2022, the fourth quarter of calendar year 2022 was not filed until February 13, 2023. These were considered late filings. 2. The fiscal agent did not maintain quarterly certification on file for the first quarter of calendar year 2022. Copies had to be obtained from CFIS and those copies were not the originals signed by approving authorities. 3. For all submissions, the fiscal agent was unable to provide system reports from their accounting system that reconciled to the actual financial data (i.e. beginning balances, revenues, expenses, ending balances) submitted to BCFTA via CFIS. 4. For all submissions, the fiscal agent was unable to provide any support for the amounts they reported as accruals on the certifications. 5. The ending balance reported on the quarterly financial certification for the second quarter of calendar year 2022 did not agree to the beginning balance reported for the third quarter of calendar year 2022, the ending balance reported on the quarterly financial certification for the second quarter of calendar year 2021 does not agree to the beginning balance of the third quarter of calendar year 2021, the ending balance reported on the quarterly financial certification for the 4th quarter of calendar year 2021 did not agree to the beginning balance of the first quarter of calendar year 2022. 6. For the fourth quarter of 2021, the month to month beginning and ending balances do not agree. This could lead to questions regarding accuracy of the amounts reported to the Ohio Department of Job and Family Services. The Consortium should develop and implement procedures to ensure quarterly reports are filed no later than the tenth calendar day of the second month following the quarter the report represents. In addition, all data reported thru these quarterly reports should be supported by the accounting system of the Fiscal Agent.
Department: United States Department of Housing and Urban Development Program Name: Emergency Solutions Grant Program Federal Assistance Listing Number: 14.231 Significant deficiency – Subrecipient monitoring Criteria: As described in Part 2 CFR Part 200, Subpart D, section 200.332 a pass-through entity must clearly identify to the subrecipient as a subaward and include certain key information at the time of the subaward. One such key item is the dollar amount made available under each federal award and the Assistance Listing number. Condition: While performing our audit of the Organization’s subrecipient monitoring, we noted the Organization did not include Assistance Listing number to the subrecipient at the time of the subaward. Cause: The Organization has not implemented sufficient internal control policies to adhere to the requirements of Uniform Guidance. Effect: Noncompliance may impact future funding from federal and state awarding agencies. Questioned Costs: None. Repeat Finding: No Recommendation: We recommend the Organization develop agreements with subrecipients to properly reflect each of the required elements included in Part 2 CFR Part 200, Subpart D, section 200.332. View of Responsible Official: We agree with this finding and will include the relevant information in our subawards in the future.
Department: United States Department of Housing and Urban Development Program Name: Emergency Solutions Grant Program Federal Assistance Listing Number: 14.231 Significant deficiency – Subrecipient monitoring Criteria: As described in Part 2 CFR Part 200, Subpart D, section 200.332 a pass-through entity must clearly identify to the subrecipient as a subaward and include certain key information at the time of the subaward. One such key item is the dollar amount made available under each federal award and the Assistance Listing number. Condition: While performing our audit of the Organization’s subrecipient monitoring, we noted the Organization did not include Assistance Listing number to the subrecipient at the time of the subaward. Cause: The Organization has not implemented sufficient internal control policies to adhere to the requirements of Uniform Guidance. Effect: Noncompliance may impact future funding from federal and state awarding agencies. Questioned Costs: None. Repeat Finding: No Recommendation: We recommend the Organization develop agreements with subrecipients to properly reflect each of the required elements included in Part 2 CFR Part 200, Subpart D, section 200.332. View of Responsible Official: We agree with this finding and will include the relevant information in our subawards in the future.
Department: United States Department of Housing and Urban Development Program Name: Emergency Solutions Grant Program Federal Assistance Listing Number: 14.231 Significant deficiency – Subrecipient monitoring Criteria: As described in Part 2 CFR Part 200, Subpart D, section 200.332 a pass-through entity must clearly identify to the subrecipient as a subaward and include certain key information at the time of the subaward. One such key item is the dollar amount made available under each federal award and the Assistance Listing number. Condition: While performing our audit of the Organization’s subrecipient monitoring, we noted the Organization did not include Assistance Listing number to the subrecipient at the time of the subaward. Cause: The Organization has not implemented sufficient internal control policies to adhere to the requirements of Uniform Guidance. Effect: Noncompliance may impact future funding from federal and state awarding agencies. Questioned Costs: None. Repeat Finding: No Recommendation: We recommend the Organization develop agreements with subrecipients to properly reflect each of the required elements included in Part 2 CFR Part 200, Subpart D, section 200.332. View of Responsible Official: We agree with this finding and will include the relevant information in our subawards in the future.
Department: United States Department of Housing and Urban Development Program Name: Emergency Solutions Grant Program Federal Assistance Listing Number: 14.231 Significant deficiency – Subrecipient monitoring Criteria: As described in Part 2 CFR Part 200, Subpart D, section 200.332 a pass-through entity must clearly identify to the subrecipient as a subaward and include certain key information at the time of the subaward. One such key item is the dollar amount made available under each federal award and the Assistance Listing number. Condition: While performing our audit of the Organization’s subrecipient monitoring, we noted the Organization did not include Assistance Listing number to the subrecipient at the time of the subaward. Cause: The Organization has not implemented sufficient internal control policies to adhere to the requirements of Uniform Guidance. Effect: Noncompliance may impact future funding from federal and state awarding agencies. Questioned Costs: None. Repeat Finding: No Recommendation: We recommend the Organization develop agreements with subrecipients to properly reflect each of the required elements included in Part 2 CFR Part 200, Subpart D, section 200.332. View of Responsible Official: We agree with this finding and will include the relevant information in our subawards in the future.
Condition: During the test of 100% of expenditures, two (2) expenditures totaling $570,080, for the Coronavirus State and Local Fiscal Recovery Funds, it was noted the County had one (1) subrecipient and the County did not have a subrecipient monitoring policy, and the County did not obtain subrecipient agreements comprising the following information: • Subrecipient name. • Subrecipient Authorized Representative and program contact information. • Subrecipient Employee Identification Number (EIN) and DUNS number. • Federal Award Identification Number (FAIN). • Name of Federal Awarding Agency. • Contact information for the official at the Federal Awarding Agency. • Catalog of Assistance Listing (AL) number and name. • Federal award date. • Total amount of the federal award and indirect cost rate. • Federal award project description. • Start and end date of the agreement. • Amount of federal funds budgeted for the agreement and indirect cost rate allowed. • A statement that all activities must be in accordance with federal statutes, regulations, and terms and conditions of the federal award. The subrecipient should receive a copy of the award documents. • A detailed description of any additional requirements you want the subrecipient to be responsible for such as performance and/or financial reports, attending meetings and/or trainings, etc. • A statement about the monitoring activities, such as where/when they will take place; also include a statement indicating the subrecipient will collaborate on monitoring activities including providing requested financial documents. • A statement indicating if any of the items in the agreement change during the period of performance, the agreement will be amended. Provide close out terms and conditions. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with compliance requirements. Effect of Condition: This condition resulted in noncompliance with federal grant guidelines. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and implement internal controls to ensure compliance with these requirements. Management Response: Board of County Commissioners: The Board of County Commissioners is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The Board of County Commissioners, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The Board of County Commissioners will work with all elected officials, the third-party administrator, and federal, state and local partners to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. To assist in this process, the Board of County Commissioners engaged a third-party administrator to oversee the grant process, including application, eligibility, review, requirements, contracting, recipient tracking and oversight, and documentation and reporting. The Board of County Commissioners will work with the third-party administrator to ensure proper grant administration. Criteria: 2 CFR 200 §200.332 Requirement for Pass-Through Entities states in part: All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations and the terms and conditions of the federal award. (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part. (6) Appropriate terms and conditions concerning closeout of the subaward.
Assistance Listing 93.558 Temporary Assistance for Needy Families Condition: Two out of two subrecipients selected for testing did not have one or more required elements defined in §2CFR 200.332 (a)(1) & (2) in their subrecipient agreements with the Mayor’s Office of Community Empowerment and Opportunity. For one subrecipient, the contract did not contain specific language indicating the Federal assistance listing number or title. For the other subrecipient, the contract did not have the federal compliance language to ensure subrecipient’s compliance with federal statutes, regulations, and the terms of the federal award. The funding source for this program is the PA Department of Human Services. Criteria: §2CFR 200.332 (a)(1) & (2) state that the pass-through entity must ensure every subaward is clearly identified to the subrecipient by including assistance listing numbers and titles, and the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award. Effect: Failure to provide all the required subaward information may result in noncompliance at the subrecipient level. Cause: The Mayor’s Office of Community Empowerment and Opportunity failed to include the required elements in the subrecipient agreements. Recommendation: We recommend that management modify and/or strengthen its current policies and procedures to ensure that all required award information and applicable requirements are communicated to subrecipients at the time of subaward. Views of the Responsible Officials and Corrective Action Plan: Management agrees with the finding and recommendation. Starting from FY2024, MOCEO will include a Notice of Award document for all subrecipients contracts. This document will contain the necessary OMB required information to clearly identify award details for the subrecipient. Contact Person: Allison Elliott, Director of Finance, Mayor’s Office of Community Empowerment and Opportunity, 215-685-3626
Children and Youth Programs Assistance Listing 93.558 Temporary Assistance for Needy Families Assistance Listing 93.658 Foster Care – Title IV-E Act 148 Pennsylvania Department of Human Services Condition: For all 32 sampled Department of Human Services (DHS) subrecipients, the subaward letters sent by DHS to its subrecipients did not identify either the federal program names or the assistance listing numbers. The programs are funded through the Pennsylvania Department of Human Services. Criteria: Per the OMB’s Uniform Guidance 2 CFR section 200.332 (a)(1), the pass-through entity must ensure every subaward is clearly identified to the subrecipient as a subaward and includes certain required information at the time of the subaward. Required information includes the federal award identification, such as the assistance listing number and title, to ensure that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award. Effect: Failure to provide all required subaward information to subrecipients may result in noncompliance at the subrecipient level. Cause: DHS failed to include the required elements in the subaward letters sent to subrecipients. Recommendation: DHS management should modify the subaward letters sent to subrecipients to include the federal program names and assistance listing numbers so that all required award information is communicated to subrecipients at the time of subaward. Views of the Responsible Officials and Corrective Action Plan: Effective 10/13/23, DHS has been preparing FY24 funding allocation letters that will be sent to provider agencies immediately. Going forward, the funding allocation letters will go out at the beginning of the contract fiscal year. Contact Person: Landuleni Shipanga, Controller, Department of Human Services, 215-683-6366.
Children and Youth Programs Assistance Listing 93.558 Temporary Assistance for Needy Families Assistance Listing 93.658 Foster Care – Title IV-E Act 148 Pennsylvania Department of Human Services Condition: For all 32 sampled Department of Human Services (DHS) subrecipients, the subaward letters sent by DHS to its subrecipients did not identify either the federal program names or the assistance listing numbers. The programs are funded through the Pennsylvania Department of Human Services. Criteria: Per the OMB’s Uniform Guidance 2 CFR section 200.332 (a)(1), the pass-through entity must ensure every subaward is clearly identified to the subrecipient as a subaward and includes certain required information at the time of the subaward. Required information includes the federal award identification, such as the assistance listing number and title, to ensure that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award. Effect: Failure to provide all required subaward information to subrecipients may result in noncompliance at the subrecipient level. Cause: DHS failed to include the required elements in the subaward letters sent to subrecipients. Recommendation: DHS management should modify the subaward letters sent to subrecipients to include the federal program names and assistance listing numbers so that all required award information is communicated to subrecipients at the time of subaward. Views of the Responsible Officials and Corrective Action Plan: Effective 10/13/23, DHS has been preparing FY24 funding allocation letters that will be sent to provider agencies immediately. Going forward, the funding allocation letters will go out at the beginning of the contract fiscal year. Contact Person: Landuleni Shipanga, Controller, Department of Human Services, 215-683-6366.
Assistance Listings numbers and names: 14.231 Emergency Solutions Grant Program 14.231 COVID-19—Emergency Solutions Grant Program Award numbers and years: E-20-DW-04-001, July 1, 2020 through September 9, 2022 E-21-DC-04-001, July 1, 2021 through September 9, 2023 Federal agency: U.S. Department of Housing and Urban Development Questioned costs: $1,425 Assistance Listings number and name: 14.267 Continuum of Care Program Award numbers and years: AZ0009L9T001912, October 1, 2020 through September 30, 2021; AZ0118L9T002008, February 1, 2021 through January 31, 2022; AZ0011L9T002013, May 1, 2021 through April 30, 2022; AZ0173L9T002004, July 1, 2021 through June 30, 2022; AZ0009L9T002013, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Housing and Urban Development Questioned costs: $46,352 Compliance requirement: Subrecipient monitoring Total questioned costs: $47,777 Condition—Contrary to federal regulations and its federal award terms, the Department of Housing (ADOH) and Department of Economic Security (DES) reimbursed 1 nonprofit organization subrecipient for federal program costs totaling $47,777 during fiscal year 2022 that were unsupported, unallowable, and/or paid to the nonprofit organization’s principal officers or their immediate family member in violation of conflict-of-interest disclosure requirements. Specifically, we reviewed 51 reimbursements that included Continuum of Care Program and Emergency Solutions Grant Program costs totaling $446,695 and $10,692 for the year, respectively, and found that the departments reimbursed the subrecipient for: • $35,562 for financial and accounting services, travel, and supplies 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 both departments as required by federal laws. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, neither department verified that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the programs’ requirements. We noted that the allocation method used may have resulted in multiple programs being overbilled for these services by up to $5,087. (ADOH and DES) • $7,274 for bookkeeping services that were not adequately supported by sufficiently detailed invoices and a signed 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 departments reimbursed the Treasurer’s family member, whose bookkeeping services company was not disclosed as a conflict of interest to the departments as required by federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the departments did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the programs’ requirements. (ADOH and DES) • $4,365 for repairs and maintenance, travel, and supplies that were paid to another principal officer who performed various handyman services, including plumbing, painting, and building repairs, that were not adequately supported by a contract having specified price rates for the services and terms; therefore, we were unable to verify if the amounts reimbursed by ADOH were appropriate. Further, ADOH reimbursed the principal officer, whose services were not disclosed as a conflict of interest to ADOH as required by its contract with the subrecipient and federal regulations. (ADOH) • $576 for incentive payments to the subrecipient’s executive director without documentation demonstrating 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 ADOH were allowable. (ADOH) Additionally, contrary to federal regulations, the departments had not ensured that the subrecipient implemented competitive purchasing procedures when procuring the professional services and handyman services described above, and the subrecipient was unable to provide documentation that it had competitively procured the services. (ADOH and DES) The Continuum of Care and the Emergency Solutions Grant Programs were not audited as major federal programs for the State’s fiscal year 2022 single audit; therefore, the scope of our review was not sufficient to determine whether the departments or their subrecipients complied with all applicable federal requirements for these programs. During the audit, we became aware of the potentially noncompliant 51 reimbursements involving 1 of the departments’ nonprofit subrecipients with which they partner to carry out federal and State programs, including the Continuum of Care Program, the Emergency Solutions Grants Program, and Temporary Assistance to Needy Families (TANF), which was audited as a major federal program for fiscal year 2022, as well as the State Housing Trust Fund. Our review of select reimbursements to this subrecipient resulted in similar findings for the TANF federal program and the State Housing Trust Fund that are described in items 2022-114 and 2022-05, respectively. Effect—The departments’ lack of required monitoring increased the risk that the monies it awarded to 1 nonprofit organization may not have been spent in accordance with the award terms and program requirements. Further, the departments’ reimbursing the subrecipient for $47,777 of unallowable or unsupported costs and/or costs paid to the nonprofit organization’s principal officers 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 of providing housing assistance to those in need. Consequently, the departments may be required to return these monies to the federal agencies in accordance with federal requirements.1 Cause—ADOH 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. Also, ADOH had not properly assessed this 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, ADOH was unaware that the subrecipient had not informed it of principal officers’ conflicts of interest so that ADOH could ensure that those principal officers or their immediate family member were not involved in decision-making related to those conflicts and selectively reviewed the related costs and activities for compliance purposes. Further, ADOH personnel responsible for reviewing and approving the subrecipient’s reimbursement requests reported to us that they were trained to not follow its policies and procedures but, instead, to approve any costs that had been previously reimbursed. As reported in finding 2022-114, although the DES 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, DES 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, DES 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 Departments 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 Departments 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 Departments’ 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 Departments 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 Departments should: 1. Immediately stop reimbursing the nonprofit subrecipient for costs that are unsupported, unallowable, and/or paid to the nonprofit subrecipient’s principal officers 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 in accordance with its subaward contract. (ADOH and DES) 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. (ADOH and DES) 3. Train personnel responsible for reviewing and approving subrecipient reimbursement requests on how to identify costs that are unallowable under federal regulations. (ADOH) 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. (ADOH and DES) 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 Departments any potential conflicts of interest. The Departments may need to provide training and technical assistance to subrecipients that addresses these compliance areas, including the Departments’ 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. (ADOH and DES) 6. Continue to work with the nonprofit subrecipient to resolve the $47,777 in unallowable costs, including recovering these monies from the subrecipient and assessing the continued need to use this subrecipient for services. (ADOH and DES) 7. Work with the federal agencies to resolve the $47,777 of unallowable costs that it reimbursed, which may involve returning monies to the agencies. (ADOH and DES) 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 24 CFR §578.95 and 45 CFR §75.112.
Assistance Listings numbers and names: 14.231 Emergency Solutions Grant Program 14.231 COVID-19—Emergency Solutions Grant Program Award numbers and years: E-20-DW-04-001, July 1, 2020 through September 9, 2022 E-21-DC-04-001, July 1, 2021 through September 9, 2023 Federal agency: U.S. Department of Housing and Urban Development Questioned costs: $1,425 Assistance Listings number and name: 14.267 Continuum of Care Program Award numbers and years: AZ0009L9T001912, October 1, 2020 through September 30, 2021; AZ0118L9T002008, February 1, 2021 through January 31, 2022; AZ0011L9T002013, May 1, 2021 through April 30, 2022; AZ0173L9T002004, July 1, 2021 through June 30, 2022; AZ0009L9T002013, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Housing and Urban Development Questioned costs: $46,352 Compliance requirement: Subrecipient monitoring Total questioned costs: $47,777 Condition—Contrary to federal regulations and its federal award terms, the Department of Housing (ADOH) and Department of Economic Security (DES) reimbursed 1 nonprofit organization subrecipient for federal program costs totaling $47,777 during fiscal year 2022 that were unsupported, unallowable, and/or paid to the nonprofit organization’s principal officers or their immediate family member in violation of conflict-of-interest disclosure requirements. Specifically, we reviewed 51 reimbursements that included Continuum of Care Program and Emergency Solutions Grant Program costs totaling $446,695 and $10,692 for the year, respectively, and found that the departments reimbursed the subrecipient for: • $35,562 for financial and accounting services, travel, and supplies 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 both departments as required by federal laws. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, neither department verified that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the programs’ requirements. We noted that the allocation method used may have resulted in multiple programs being overbilled for these services by up to $5,087. (ADOH and DES) • $7,274 for bookkeeping services that were not adequately supported by sufficiently detailed invoices and a signed 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 departments reimbursed the Treasurer’s family member, whose bookkeeping services company was not disclosed as a conflict of interest to the departments as required by federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the departments did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the programs’ requirements. (ADOH and DES) • $4,365 for repairs and maintenance, travel, and supplies that were paid to another principal officer who performed various handyman services, including plumbing, painting, and building repairs, that were not adequately supported by a contract having specified price rates for the services and terms; therefore, we were unable to verify if the amounts reimbursed by ADOH were appropriate. Further, ADOH reimbursed the principal officer, whose services were not disclosed as a conflict of interest to ADOH as required by its contract with the subrecipient and federal regulations. (ADOH) • $576 for incentive payments to the subrecipient’s executive director without documentation demonstrating 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 ADOH were allowable. (ADOH) Additionally, contrary to federal regulations, the departments had not ensured that the subrecipient implemented competitive purchasing procedures when procuring the professional services and handyman services described above, and the subrecipient was unable to provide documentation that it had competitively procured the services. (ADOH and DES) The Continuum of Care and the Emergency Solutions Grant Programs were not audited as major federal programs for the State’s fiscal year 2022 single audit; therefore, the scope of our review was not sufficient to determine whether the departments or their subrecipients complied with all applicable federal requirements for these programs. During the audit, we became aware of the potentially noncompliant 51 reimbursements involving 1 of the departments’ nonprofit subrecipients with which they partner to carry out federal and State programs, including the Continuum of Care Program, the Emergency Solutions Grants Program, and Temporary Assistance to Needy Families (TANF), which was audited as a major federal program for fiscal year 2022, as well as the State Housing Trust Fund. Our review of select reimbursements to this subrecipient resulted in similar findings for the TANF federal program and the State Housing Trust Fund that are described in items 2022-114 and 2022-05, respectively. Effect—The departments’ lack of required monitoring increased the risk that the monies it awarded to 1 nonprofit organization may not have been spent in accordance with the award terms and program requirements. Further, the departments’ reimbursing the subrecipient for $47,777 of unallowable or unsupported costs and/or costs paid to the nonprofit organization’s principal officers 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 of providing housing assistance to those in need. Consequently, the departments may be required to return these monies to the federal agencies in accordance with federal requirements.1 Cause—ADOH 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. Also, ADOH had not properly assessed this 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, ADOH was unaware that the subrecipient had not informed it of principal officers’ conflicts of interest so that ADOH could ensure that those principal officers or their immediate family member were not involved in decision-making related to those conflicts and selectively reviewed the related costs and activities for compliance purposes. Further, ADOH personnel responsible for reviewing and approving the subrecipient’s reimbursement requests reported to us that they were trained to not follow its policies and procedures but, instead, to approve any costs that had been previously reimbursed. As reported in finding 2022-114, although the DES 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, DES 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, DES 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 Departments 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 Departments 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 Departments’ 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 Departments 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 Departments should: 1. Immediately stop reimbursing the nonprofit subrecipient for costs that are unsupported, unallowable, and/or paid to the nonprofit subrecipient’s principal officers 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 in accordance with its subaward contract. (ADOH and DES) 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. (ADOH and DES) 3. Train personnel responsible for reviewing and approving subrecipient reimbursement requests on how to identify costs that are unallowable under federal regulations. (ADOH) 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. (ADOH and DES) 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 Departments any potential conflicts of interest. The Departments may need to provide training and technical assistance to subrecipients that addresses these compliance areas, including the Departments’ 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. (ADOH and DES) 6. Continue to work with the nonprofit subrecipient to resolve the $47,777 in unallowable costs, including recovering these monies from the subrecipient and assessing the continued need to use this subrecipient for services. (ADOH and DES) 7. Work with the federal agencies to resolve the $47,777 of unallowable costs that it reimbursed, which may involve returning monies to the agencies. (ADOH and DES) 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 24 CFR §578.95 and 45 CFR §75.112.
Assistance Listings numbers and names: 14.231 Emergency Solutions Grant Program 14.231 COVID-19—Emergency Solutions Grant Program Award numbers and years: E-20-DW-04-001, July 1, 2020 through September 9, 2022 E-21-DC-04-001, July 1, 2021 through September 9, 2023 Federal agency: U.S. Department of Housing and Urban Development Questioned costs: $1,425 Assistance Listings number and name: 14.267 Continuum of Care Program Award numbers and years: AZ0009L9T001912, October 1, 2020 through September 30, 2021; AZ0118L9T002008, February 1, 2021 through January 31, 2022; AZ0011L9T002013, May 1, 2021 through April 30, 2022; AZ0173L9T002004, July 1, 2021 through June 30, 2022; AZ0009L9T002013, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Housing and Urban Development Questioned costs: $46,352 Compliance requirement: Subrecipient monitoring Total questioned costs: $47,777 Condition—Contrary to federal regulations and its federal award terms, the Department of Housing (ADOH) and Department of Economic Security (DES) reimbursed 1 nonprofit organization subrecipient for federal program costs totaling $47,777 during fiscal year 2022 that were unsupported, unallowable, and/or paid to the nonprofit organization’s principal officers or their immediate family member in violation of conflict-of-interest disclosure requirements. Specifically, we reviewed 51 reimbursements that included Continuum of Care Program and Emergency Solutions Grant Program costs totaling $446,695 and $10,692 for the year, respectively, and found that the departments reimbursed the subrecipient for: • $35,562 for financial and accounting services, travel, and supplies 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 both departments as required by federal laws. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, neither department verified that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the programs’ requirements. We noted that the allocation method used may have resulted in multiple programs being overbilled for these services by up to $5,087. (ADOH and DES) • $7,274 for bookkeeping services that were not adequately supported by sufficiently detailed invoices and a signed 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 departments reimbursed the Treasurer’s family member, whose bookkeeping services company was not disclosed as a conflict of interest to the departments as required by federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the departments did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the programs’ requirements. (ADOH and DES) • $4,365 for repairs and maintenance, travel, and supplies that were paid to another principal officer who performed various handyman services, including plumbing, painting, and building repairs, that were not adequately supported by a contract having specified price rates for the services and terms; therefore, we were unable to verify if the amounts reimbursed by ADOH were appropriate. Further, ADOH reimbursed the principal officer, whose services were not disclosed as a conflict of interest to ADOH as required by its contract with the subrecipient and federal regulations. (ADOH) • $576 for incentive payments to the subrecipient’s executive director without documentation demonstrating 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 ADOH were allowable. (ADOH) Additionally, contrary to federal regulations, the departments had not ensured that the subrecipient implemented competitive purchasing procedures when procuring the professional services and handyman services described above, and the subrecipient was unable to provide documentation that it had competitively procured the services. (ADOH and DES) The Continuum of Care and the Emergency Solutions Grant Programs were not audited as major federal programs for the State’s fiscal year 2022 single audit; therefore, the scope of our review was not sufficient to determine whether the departments or their subrecipients complied with all applicable federal requirements for these programs. During the audit, we became aware of the potentially noncompliant 51 reimbursements involving 1 of the departments’ nonprofit subrecipients with which they partner to carry out federal and State programs, including the Continuum of Care Program, the Emergency Solutions Grants Program, and Temporary Assistance to Needy Families (TANF), which was audited as a major federal program for fiscal year 2022, as well as the State Housing Trust Fund. Our review of select reimbursements to this subrecipient resulted in similar findings for the TANF federal program and the State Housing Trust Fund that are described in items 2022-114 and 2022-05, respectively. Effect—The departments’ lack of required monitoring increased the risk that the monies it awarded to 1 nonprofit organization may not have been spent in accordance with the award terms and program requirements. Further, the departments’ reimbursing the subrecipient for $47,777 of unallowable or unsupported costs and/or costs paid to the nonprofit organization’s principal officers 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 of providing housing assistance to those in need. Consequently, the departments may be required to return these monies to the federal agencies in accordance with federal requirements.1 Cause—ADOH 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. Also, ADOH had not properly assessed this 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, ADOH was unaware that the subrecipient had not informed it of principal officers’ conflicts of interest so that ADOH could ensure that those principal officers or their immediate family member were not involved in decision-making related to those conflicts and selectively reviewed the related costs and activities for compliance purposes. Further, ADOH personnel responsible for reviewing and approving the subrecipient’s reimbursement requests reported to us that they were trained to not follow its policies and procedures but, instead, to approve any costs that had been previously reimbursed. As reported in finding 2022-114, although the DES 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, DES 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, DES 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 Departments 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 Departments 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 Departments’ 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 Departments 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 Departments should: 1. Immediately stop reimbursing the nonprofit subrecipient for costs that are unsupported, unallowable, and/or paid to the nonprofit subrecipient’s principal officers 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 in accordance with its subaward contract. (ADOH and DES) 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. (ADOH and DES) 3. Train personnel responsible for reviewing and approving subrecipient reimbursement requests on how to identify costs that are unallowable under federal regulations. (ADOH) 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. (ADOH and DES) 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 Departments any potential conflicts of interest. The Departments may need to provide training and technical assistance to subrecipients that addresses these compliance areas, including the Departments’ 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. (ADOH and DES) 6. Continue to work with the nonprofit subrecipient to resolve the $47,777 in unallowable costs, including recovering these monies from the subrecipient and assessing the continued need to use this subrecipient for services. (ADOH and DES) 7. Work with the federal agencies to resolve the $47,777 of unallowable costs that it reimbursed, which may involve returning monies to the agencies. (ADOH and DES) 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 24 CFR §578.95 and 45 CFR §75.112.
Assistance Listings numbers and names: 14.231 Emergency Solutions Grant Program 14.231 COVID-19—Emergency Solutions Grant Program Award numbers and years: E-20-DW-04-001, July 1, 2020 through September 9, 2022 E-21-DC-04-001, July 1, 2021 through September 9, 2023 Federal agency: U.S. Department of Housing and Urban Development Questioned costs: $1,425 Assistance Listings number and name: 14.267 Continuum of Care Program Award numbers and years: AZ0009L9T001912, October 1, 2020 through September 30, 2021; AZ0118L9T002008, February 1, 2021 through January 31, 2022; AZ0011L9T002013, May 1, 2021 through April 30, 2022; AZ0173L9T002004, July 1, 2021 through June 30, 2022; AZ0009L9T002013, October 1, 2021 through September 30, 2022 Federal agency: U.S. Department of Housing and Urban Development Questioned costs: $46,352 Compliance requirement: Subrecipient monitoring Total questioned costs: $47,777 Condition—Contrary to federal regulations and its federal award terms, the Department of Housing (ADOH) and Department of Economic Security (DES) reimbursed 1 nonprofit organization subrecipient for federal program costs totaling $47,777 during fiscal year 2022 that were unsupported, unallowable, and/or paid to the nonprofit organization’s principal officers or their immediate family member in violation of conflict-of-interest disclosure requirements. Specifically, we reviewed 51 reimbursements that included Continuum of Care Program and Emergency Solutions Grant Program costs totaling $446,695 and $10,692 for the year, respectively, and found that the departments reimbursed the subrecipient for: • $35,562 for financial and accounting services, travel, and supplies 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 both departments as required by federal laws. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, neither department verified that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the programs’ requirements. We noted that the allocation method used may have resulted in multiple programs being overbilled for these services by up to $5,087. (ADOH and DES) • $7,274 for bookkeeping services that were not adequately supported by sufficiently detailed invoices and a signed 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 departments reimbursed the Treasurer’s family member, whose bookkeeping services company was not disclosed as a conflict of interest to the departments as required by federal regulations. Also, the subrecipient allocated these costs to other federal programs and nonfederal activities; however, the departments did not verify that the allocation method the subrecipient used was reasonable or that the costs, as allocated, were allowed by the programs’ requirements. (ADOH and DES) • $4,365 for repairs and maintenance, travel, and supplies that were paid to another principal officer who performed various handyman services, including plumbing, painting, and building repairs, that were not adequately supported by a contract having specified price rates for the services and terms; therefore, we were unable to verify if the amounts reimbursed by ADOH were appropriate. Further, ADOH reimbursed the principal officer, whose services were not disclosed as a conflict of interest to ADOH as required by its contract with the subrecipient and federal regulations. (ADOH) • $576 for incentive payments to the subrecipient’s executive director without documentation demonstrating 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 ADOH were allowable. (ADOH) Additionally, contrary to federal regulations, the departments had not ensured that the subrecipient implemented competitive purchasing procedures when procuring the professional services and handyman services described above, and the subrecipient was unable to provide documentation that it had competitively procured the services. (ADOH and DES) The Continuum of Care and the Emergency Solutions Grant Programs were not audited as major federal programs for the State’s fiscal year 2022 single audit; therefore, the scope of our review was not sufficient to determine whether the departments or their subrecipients complied with all applicable federal requirements for these programs. During the audit, we became aware of the potentially noncompliant 51 reimbursements involving 1 of the departments’ nonprofit subrecipients with which they partner to carry out federal and State programs, including the Continuum of Care Program, the Emergency Solutions Grants Program, and Temporary Assistance to Needy Families (TANF), which was audited as a major federal program for fiscal year 2022, as well as the State Housing Trust Fund. Our review of select reimbursements to this subrecipient resulted in similar findings for the TANF federal program and the State Housing Trust Fund that are described in items 2022-114 and 2022-05, respectively. Effect—The departments’ lack of required monitoring increased the risk that the monies it awarded to 1 nonprofit organization may not have been spent in accordance with the award terms and program requirements. Further, the departments’ reimbursing the subrecipient for $47,777 of unallowable or unsupported costs and/or costs paid to the nonprofit organization’s principal officers 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 of providing housing assistance to those in need. Consequently, the departments may be required to return these monies to the federal agencies in accordance with federal requirements.1 Cause—ADOH 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. Also, ADOH had not properly assessed this 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, ADOH was unaware that the subrecipient had not informed it of principal officers’ conflicts of interest so that ADOH could ensure that those principal officers or their immediate family member were not involved in decision-making related to those conflicts and selectively reviewed the related costs and activities for compliance purposes. Further, ADOH personnel responsible for reviewing and approving the subrecipient’s reimbursement requests reported to us that they were trained to not follow its policies and procedures but, instead, to approve any costs that had been previously reimbursed. As reported in finding 2022-114, although the DES 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, DES 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, DES 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 Departments 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 Departments 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 Departments’ 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 Departments 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 Departments should: 1. Immediately stop reimbursing the nonprofit subrecipient for costs that are unsupported, unallowable, and/or paid to the nonprofit subrecipient’s principal officers 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 in accordance with its subaward contract. (ADOH and DES) 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. (ADOH and DES) 3. Train personnel responsible for reviewing and approving subrecipient reimbursement requests on how to identify costs that are unallowable under federal regulations. (ADOH) 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. (ADOH and DES) 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 Departments any potential conflicts of interest. The Departments may need to provide training and technical assistance to subrecipients that addresses these compliance areas, including the Departments’ 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. (ADOH and DES) 6. Continue to work with the nonprofit subrecipient to resolve the $47,777 in unallowable costs, including recovering these monies from the subrecipient and assessing the continued need to use this subrecipient for services. (ADOH and DES) 7. Work with the federal agencies to resolve the $47,777 of unallowable costs that it reimbursed, which may involve returning monies to the agencies. (ADOH and DES) 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 24 CFR §578.95 and 45 CFR §75.112.
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: 21.019 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.