FINDING 2025-003 Subject: Teacher and School Leader Incentive Grants – Subrecipient Monitoring Federal Agency: Department of Education Federal Program: Teacher and School Leader Incentive Grants Assistance Listings Number: 84.374 Federal Award Numbers and Years (or Other Identifying Numbers): Year 2-3, Year 3-4 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, material noncompliance related to the Teacher and School Leader Incentive Grants (TSL) funds passed through to subrecipients. The School Corporation received and passed through to subrecipients $6,143,393 of TSL funds. The School Corporation is to clearly identify the award and applicable requirements to the subrecipients, evaluate the risk of noncompliance related to the subrecipients to determine appropriate monitoring of the subaward, and monitor the activities of the subrecipients to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. The School Corporation did not enter into an agreement with the subrecipients. As such, there is no agreement between the School Corporation and the subrecipients that clearly identifies the award as a subaward or includes all the required data elements. In addition, the School Corporation did not have any policies or procedures in place to evaluate the subrecipients' risk of noncompliance or to monitor the activity of the subrecipients. Per inquiry of the School Corporation, it was determined an evaluation of the risk of noncompliance for the subrecipients was not completed, nor did the subrecipients' files support any such evaluation. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.332 states: "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. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations." Cause The School Corporation's management was not aware of the requirements for subrecipient and subaward monitoring compliance. Thus, the School Corporation had not implemented its system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Subrecipient Monitoring compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls, including segregation of duties, to evaluate the subrecipients' risk of noncompliance and adequately monitor the subrecipients. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place, as needed, to evaluate and monitor its subrecipients. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Department of Aging Finding 2025 – 003: ALN 93.044, 93.045, and 93.053 – Aging Cluster (including COVID-19) A Material Weakness and Material Noncompliance Exist in the Department of Aging Related to Subrecipient Monitoring (A Similar Condition Was Noted in Prior Year Finding 2024-003) Federal Grant Number(s) and Year(s): 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PASTPH (1/01/2022 – 9/30/2025), 2301PAOACM (10/01/2022 – 9/30/2025), 2301PAOAHD (10/01/2022 – 9/30/2025), 2301PAOASS (10/01/2022 – 9/30/2025), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2501PAOASS (10/01/2024 – 9/30/2026), 2501PAOACM (10/01/2024 – 9/30/2026), 2501PAOAHD (10/01/2024 – 9/30/2026), 2501PAOANS (10/01/2024 – 9/30/2026) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirement: Subrecipient Monitoring Condition: Within the Aging Cluster, the Pennsylvania Department of Aging (PDOA) contracts with 52 Area Agency on Aging subrecipients to provide various services that include cares support, preventive health, and nutrition services, among others. Our audit testing disclosed that PDOA performed subrecipient monitoring on 18 of the 52 subrecipients during the fiscal year ended June 30, 2025. The review period for the 18 subrecipients monitored was 2019 through 2023, representing old grant years. The monitoring performed did not include grants in years 2024 and 2025 to ensure timely compliance. The Aging Cluster subrecipients received $66.3 million, or 97 percent, of Aging Cluster Program expenditures totaling $68.1 million reported on the Schedule of Expenditures of Federal Awards (SEFA). Criteria: 45 CFR Section 1321.9 State agency policies and procedures, states in part: (a) The State agency on aging shall develop policies and procedures governing all aspects of programs operated as set forth in this part… The State agency is responsible for implementing, monitoring, and enforcing policies and procedures, where: (1) The policies and procedures developed by the State agency shall address how the State agency will monitor the programmatic and fiscal performance of all programs and activities initiated under this part for compliance with all requirements, and for quality and effectiveness. 2 CFR Section 200.332, Requirements for pass-through entities, states: (e) Monitor the activities of the subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. Finding 2025 – 003: (continued) (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity… (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (f) Depending upon the pass-through entity's assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. PDOA’s Policy and Procedures Manual, Section B. Roles and Responsibilities of the State Authority states: In accordance with the State’s administrative authority, the Department’s functions and responsibilities include the following: • The establishment and maintenance of policies and procedures for the fiscal and programmatic operation of the programs. • The establishment of minimum standards for the provision of services and benefits. • Enter into contracts or grants between the State and the Area Agencies on Aging (AAA) to set forth the responsibilities and performance requirements. • Provide oversight and monitoring of the AAAs for compliance with all program's standards. • Provide oversight and fiscal management of fund utilization based on funding source requirements. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Finding 2025 – 003: (continued) Cause: In response to the lack of monitoring procedures conducted in the prior year, PDOA has started monitoring subrecipients but continues to have a backlog. PDOA accelerated the monitoring schedule to include prior year review periods to bring the monitoring process current but did not monitor the current audit period. PDOA’s policy did not include a defined monitoring cycle of its subrecipients to ensure adequate monitoring was performed on a timely basis. We acknowledge that PDOA has implemented a new phase of their monitoring process. They enhanced the monitoring instrument used to monitor subrecipients and are working to eliminate the monitoring backlog. Effect: Without proper subrecipient monitoring, PDOA cannot ensure compliance with grant requirements and federal regulations, including allowable costs and other requirements. Recommendation: PDOA should perform adequate during-the-award monitoring procedures for all Aging Cluster subrecipients to ensure timely compliance with all applicable federal regulations. PDOA policy should include a defined monitoring cycle to ensure timely monitoring visits in addition to the compliance procedures. Monitoring by state officials should be supported by documentation to show the monitoring performed, areas examined, conclusions reached, and that the monitoring was performed in compliance with applicable regulations. Agency Response: PDOA agrees with the finding. Questioned Costs: The amount of questioned costs cannot be determined.
Department of Labor and Industry Finding 2025 – 009: ALN 93.558 – Temporary Assistance for Needy Families Department of Labor and Industry Did Not Perform Adequate Monitoring of Temporary Assistance for Needy Families Subrecipients (A Similar Condition Was Noted in Prior Year Finding 2024-009) Federal Grant Number(s) and Year(s): 2401PATANF (10/01/2023 – 9/30/2024), 2301PATANF (10/01/2022 – 9/30/2023), 2201PATANF (10/01/2021 – 9/30/2022), 2101PATANF (10/01/2020 – 9/30/2021) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Compliance Requirement: Subrecipient Monitoring Condition: During the fiscal year ended June 30, 2025, the Department of Labor and Industry (L&I) paid $26.9 million in Temporary Assistance for Needy Families (TANF) funding to 22 subrecipients within the Youth Employment and Training (E&T) appropriation (or 6.7 percent) out of total federal TANF expenditures of $403.4 million reported on the June 30, 2025 Schedule of Expenditures of Federal Awards (SEFA). Our testing of L&I’s during-the-award monitoring of subrecipients for the fiscal year ended June 30, 2025, disclosed that L&I did not conduct on-site monitoring or perform desk reviews of the TANF Youth Development Program (TANF YDP) for three out of five subrecipients selected for testing. Although L&I performed monitoring of these subrecipients specific to another federal program, the monitoring did not include a review of the performance of the subrecipients’ TANF YDP programs. The TANF YDP operations transitioned from the Bureau of Workforce Development Administration (BWDA) to the Bureau of Workforce Partnership and Operations (BWPO) in December 2023. During the fiscal year ended June 30, 2025, BWPO began onsite monitoring of the TANF YDP program on a limited basis by developing a pilot program that BWPO used to monitor the TANF YDP program for three subrecipients. BWPO developed a written TANF YDP Monitoring Plan that outlines plans to expand the monitoring to other TANF YDP subrecipients; however, the plan was not fully implemented as of June 30, 2025. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states: A pass-through entity must: (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. Finding 2025 – 009: (continued) (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (f) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in §200.425. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: L&I recognized the need to perform during-the-award monitoring procedures for TANF funds passed through for the Youth E&T program, but the updated monitoring procedures were not fully incorporated during the fiscal year ended June 30, 2025. Effect: TANF subrecipients could be operating in noncompliance with federal regulations without timely detection and correction by L&I management. Recommendation: L&I should continue to strengthen controls to ensure during-the-award monitoring is being performed for all TANF subrecipients and that the monitoring includes procedures to ensure that subrecipients are in compliance with applicable federal regulations. This should include examining subrecipients’ financial records and ensuring that all required Single Audits were obtained by L&I subrecipients. Agency Response: L&I agrees with this finding. TANF YDP operations transitioned from BWDA to BWPO in January 2023. Due to this transition, BWPO did not conduct on site monitoring of the TANF YDP program in Program Year (PY) 22. BWPO did begin monitoring in PY 23 on a limited basis as a pilot with 3 local areas in September of 2024. BWPO expanded monitoring efforts in 2025 by conducting PY 24 TANF YDP monitoring in alignment with the WIOA Common Measures Data Validation cycle. This enhanced desk review monitoring effort concluded by January 2026. PY is defined as July 1st to June 30th. BWPO will further expand annual monitoring of TANF YDP in alignment with the requirement to monitor all TANF YDP grant subrecipients for PY 25 and moving forward. L&I does ensure single audits are obtained from the TANF YDP sub-recipients as a part of our single audit review. Finding 2025 – 009: (continued) Questioned Costs: The amount of questioned costs cannot be determined.
Department of Human Services Finding 2025 – 008: ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Department of Human Services’ Program Monitoring of the Social Services Block Grant Subrecipients (A Similar Condition Was Noted in Prior Year Finding 2024-008) Federal Grant Number(s) and Year(s): 2501PASOSR (10/01/2024 – 9/30/2026), 2401PASOSR (10/01/2023 – 9/30/2025) Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Compliance Requirements: Cash Management, Subrecipient Monitoring Condition: Our examination of the Department of Human Services’ (DHS) procedures for monitoring Social Services Block Grant (SSBG) subrecipients revealed that DHS did not adequately risk assess and monitor the SSBG Mental Health, Homeless Assistance, and Child Welfare subrecipients to ensure that SSBG awards are used in compliance with laws and regulations, which include allowable costs, period of performance, and other requirements. Although DHS performed risk assessments of these subrecipients, the risk assessments did not include a consideration of all of the items outlined in 2 CFR Section 200.332 (c) (1)-(4). Further, the risk assessments did not define the course of action to be taken for each assigned risk level. DHS program personnel indicated that they performed on-site monitoring of eight subrecipients with seven final monitoring reports issued and one report in progress. The remaining 67 subrecipients were not monitored during the audit period. Expenditures for Mental Health, Homeless Assistance, and Child Welfare subrecipient programs not monitored totaled $21.7 million (or approximately 23.2 percent) of total SSBG program expenditures of $93.6 million reported on the Schedule of Expenditures of Federal Awards (SEFA). While we noted that DHS monitored eight of the 75 Mental Health County/County Joinder subrecipients which included Mental Health, Homeless Assistance and Child Welfare services, this coverage was not adequate. In addition, our review of the risk assessments completed for all of the aforementioned subrecipients identified several instances where subrecipient monitoring was warranted but was not conducted, including several subrecipients assessed as high risk for which no monitoring procedures were performed. In addition, for the compliance requirement related to cash management, we noted that DHS advanced funds to SSBG subrecipients in four of nine program areas, representing $34.0 million (or approximately 36.3 percent) of SSBG program expenditures, without adequately monitoring the reasonableness of the subrecipient cash balances. In particular, for the program areas related to Mental Health, Intellectual Disabilities, Homeless Assistance, and Child Welfare, DHS advanced funds to subrecipients on a quarterly basis. Our inquiries with applicable DHS program administrators disclosed that DHS did not adequately monitor the four program areas’ subrecipients for cash management compliance either at the time of payment or at any other time during the fiscal year ended June 30, 2025. Furthermore, while Single Audits of SSBG subrecipients may be conducted each year, this auditing activity does not compensate for the lack of during-the-award program monitoring, since the timing, focus, and scope of subrecipient auditing activities after year end are different than compliance monitoring to be performed by program officials during the year. Criteria: 2 CFR Section 200.332, Requirements for pass-through entities, states: (c) Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following: Finding 2025 – 008: (continued) (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (f) Depending upon the pass-through entity's assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. Finding 2025 – 008: (continued) 2 CFR Section 200.305 (b)(1), applicable for recipients and subrecipients, states in part: …Advance payments to a recipient or subrecipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. The recipient or subrecipient must make timely payments to contractors in accordance with the contract provisions. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: DHS management indicated that risk assessment and monitoring documents were created for use during on-site monitoring of SSBG subrecipients. However, due to staffing issues, on-site monitoring was not performed for all SSBG subrecipients. Consistent with prior year audits, DHS management noted that there have been no changes to the payment methodology for the Homeless Assistance, Mental Health, Intellectual Disabilities, and Child Welfare components of SSBG. These programs provide subrecipients with advances to comply with Commonwealth law and also to ensure that adequate funds are available to provide services to participants on a timely basis. DHS officials believe that their in-house payment review procedures for the SSBG program are as efficient as administratively feasible and that controls exist in each of the program areas. Without on-site program monitoring visits by funding agency officials, we consider DHS’s limited in-house reviews of subrecipient status reports or other documents to be insufficient to detect potential subrecipient noncompliance, including excess cash violations. DHS does not adjust payments to the subrecipients based on in-house reviews. Effect: Since DHS does not adequately perform during-the-award monitoring of subrecipients, including the monitoring of subrecipient cash on hand, subrecipients may not be complying with applicable grant requirements and federal regulations, including cash management standards. Recommendation: DHS should perform risk based during-the-award monitoring procedures for all SSBG subrecipients to ensure timely compliance with all applicable federal regulations. On-site monitoring visits by state officials should be supported by documentation to show the monitoring performed, areas examined, conclusions reached, and that the monitoring was performed in compliance with applicable regulations. As recommended in previous Single Audits and supported by the United States Department of Health and Human Services, DHS should either consider changing their current subrecipient payment procedures from advancement basis to reimbursement basis or establish procedures to adequately monitor subrecipient cash on hand to ensure it is limited to immediate needs, but no longer than one month. The implementation and strengthening of these controls should provide DHS with reasonable assurance as to compliance with cash management requirements at the subrecipient level. Agency Response: DHS agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined.
Reference Number: 2025-002 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2024-25 Name of Department with Finding: Department of Consumer and Business Affairs Name of Departments with No Findings: Chief Executive Office Aging and Disabilities Executive Office of the Board of Supervisors Department of Public Health Department of Economic Opportunity Internal Services Justice Care and Opportunities Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332(c)(e)(f), all pass-through entities must: (c) Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (f) Depending upon the pass-through entity's assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. Condition During our audit of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, we selected twenty one (21) subrecipients with active contracts with the County during FY 2024-25. We noted that the Department of Consumer and Business Affairs (DCBA) did not perform subrecipient monitoring for four (4) contracts administered by the department, of which one (1) contract did not have a risk assessment performed during FY 2024-25. In addition, we selected two (2) subrecipients with total expenditures of $19,217,030 that were subjected to subrecipient monitoring compliance requirements; however, it was determined that the selected subrecipients were vendors and inadvertently included in the subrecipient population. In the SEFA, the passed through to subrecipients column for this grant was reduced by $19,217,030 to reflect this correction. This is a repeat finding of 2024-002 as it relates to the subrecipient monitoring portion of the Condition. Cause Due to limited resources, the department needed more time to complete risk assessment, monitor the CSLFRF subrecipients and document the reviews in accordance with subrecipient monitoring requirements. Effect Failure to document risk assessment and monitoring results is noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332 (c)(e)(f). Questioned Costs Questioned costs were not determinable. Context Of the twenty one (21) subrecipients selected for testing, which totaled $192,086,158, from a population of ninety-seven (97) subrecipients with expenditures totaling $282,469,393, the department did not perform an annual risk assessment for one (1) subrecipient and they did not have documentary evidence supporting the monitoring of four (4) subrecipients with expenditures totaling $5,917,341. However, the department retained copies of the subrecipients’ single audit reports. The misclassification of vendors was corrected by removing them from the subrecipient expenditures, which decreased subrecipient expenditures from $301,686,423 to $282,469,393. DCBA had 7 subrecipients with total expenditures of $99,128,273 out of the total of 97 subrecipients with total expenditures of $282,469,393. The sample was not a statistically valid sample. Recommendation We recommend the County perform risk assessments and monitor the activities of its subrecipients as necessary to ensure that subawards are used for authorized purposes and maintain appropriate records for monitoring subrecipients in accordance with subrecipient monitoring requirements set forth in 2 CFR § 200.332 (c)(e)(f).
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP1096 Compliance Requirement: Subrecipient Monitoring Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Subrecipients associated with the City's Non-profit, Affordable Housing, and Homeless Initiatives activities funded by the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds were required to submit reports on program activities either quarterly or monthly. The City did not have adequate internal controls in place designed to ensure that these reports were reviewed. Responsibility for reviewing these reports rested primarily with one employee. For two of three subrecipients tested, we were not able to determine that there was a second employee involved that would ensure that the reports submitted by the subrecipients were reviewed by the City. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.332 states: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and include the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward notification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program related matters; and (2) Performing on-site reviews of the subrecipient's program operations. (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations." Cause A system of internal controls to include oversite and review of the quarterly or monthly reports prepared by the subrecipients was not in place. One individual was primarily responsible for reviewing the subrecipient reports. Effect Not having procedures in place for oversite and review of the monitoring reports could lead to noncompliance with the requirements for subrecipient monitoring. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls to include oversite and review to ensure that the subrecipient report reviews are reviewed/approved by a second party. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding Number: 2024-008 Prior Year Finding Number: 2023-015 Compliance Requirement: Subrecipient Monitoring Program: U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Award #: N/A Award Year: 10/01/2021 – 09/20/2024 Government Department/Agency: Office of the Deputy Mayor for Public Safety and Justice (DMPSJ); Office of Neighborhood Safety and Engagement (ONSE) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331(a) Requirements for Pass-Through Entities requires that pass-through entities must: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information outlined in the section noted above, pre-award assessment, indirect cost rated for the award, assistance listing number, finding and award follow-up and other pertinent actions. In accordance with the Uniform Guidance in 2 CFR Section 200.332 Requirements for Pass-Through Entities requires that pass-through entities Verify that the subrecipient is not excluded or disqualified in accordance with Section 180.300. Verification methods are provided in Section 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. In accordance with the Uniform Guidance in 2 CFR Section 200.332(e) Requirements for Pass-Through Entities requires that pass-through entities must: Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: • Review financial and performance reports • Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. • Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by Section 200.521. • Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section Section 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition – The program’s documented subrecipient monitoring requirements includes risk assessments, monitoring of subrecipients and the submission and review of monthly financial and performance reports. During our testing of the subrecipient’s compliance requirements, we noted the following issues: • Our testing of the program’s subrecipient monitoring requirements includes submission and review of monthly financial and performance reports. We noted for one (1) out of 17 samples, the subrecipient failed to submit their monthly financial and performance reports. • For one (1) out of 17 samples, the agency had no evidence to support it had performed the mandatory follow up on reported audit findings in the subrecipient’s audit report for the Corrective Action taken by the subrecipient to remediate the finding. • For one (1) out of 17 samples, the agency had no evidence that a debarment check was performed before the contract was entered into. The agency’s documented policies and the procurement procedures mandate a debarment check before entering into new contracts. Questioned Costs – Not determinable. Context – This is a condition identified per review of various District agencies’ compliance with specified monitoring requirements on the program’s subrecipients using a statistically valid sample. Effect – Subrecipients may not be properly monitored, which may result in subawards being used for unauthorized purposes in violation of the terms and conditions of the subawards or that the subaward performance goals were not achieved. Cause – There is lack of sufficient documentary evidence to support that the controls are operating as designed related to subrecipient monitoring compliance. Recommendation – We recommend that the agencies maintain sufficient documentation to evidence its internal controls over the risk assessment and monitoring of subrecipients. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – While DMPSJ doesn’t agree that it is out of compliance, DMPSJ will ensure documentation is maintained regarding its oversight of grant management. ONSE acknowledges and accepts the finding that the subrecipient failed to submit their monthly and performance reports. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section. BDO’s Response – We have reviewed management’s response and our finding remains as indicated.
Finding Number: 2024-008 Prior Year Finding Number: 2023-015 Compliance Requirement: Subrecipient Monitoring Program: U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds ALN: 21.027 Award #: N/A Award Year: 10/01/2021 – 09/20/2024 Government Department/Agency: Office of the Deputy Mayor for Public Safety and Justice (DMPSJ); Office of Neighborhood Safety and Engagement (ONSE) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331(a) Requirements for Pass-Through Entities requires that pass-through entities must: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information outlined in the section noted above, pre-award assessment, indirect cost rated for the award, assistance listing number, finding and award follow-up and other pertinent actions. In accordance with the Uniform Guidance in 2 CFR Section 200.332 Requirements for Pass-Through Entities requires that pass-through entities Verify that the subrecipient is not excluded or disqualified in accordance with Section 180.300. Verification methods are provided in Section 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. In accordance with the Uniform Guidance in 2 CFR Section 200.332(e) Requirements for Pass-Through Entities requires that pass-through entities must: Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: • Review financial and performance reports • Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. • Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by Section 200.521. • Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section Section 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition – The program’s documented subrecipient monitoring requirements includes risk assessments, monitoring of subrecipients and the submission and review of monthly financial and performance reports. During our testing of the subrecipient’s compliance requirements, we noted the following issues: • Our testing of the program’s subrecipient monitoring requirements includes submission and review of monthly financial and performance reports. We noted for one (1) out of 17 samples, the subrecipient failed to submit their monthly financial and performance reports. • For one (1) out of 17 samples, the agency had no evidence to support it had performed the mandatory follow up on reported audit findings in the subrecipient’s audit report for the Corrective Action taken by the subrecipient to remediate the finding. • For one (1) out of 17 samples, the agency had no evidence that a debarment check was performed before the contract was entered into. The agency’s documented policies and the procurement procedures mandate a debarment check before entering into new contracts. Questioned Costs – Not determinable. Context – This is a condition identified per review of various District agencies’ compliance with specified monitoring requirements on the program’s subrecipients using a statistically valid sample. Effect – Subrecipients may not be properly monitored, which may result in subawards being used for unauthorized purposes in violation of the terms and conditions of the subawards or that the subaward performance goals were not achieved. Cause – There is lack of sufficient documentary evidence to support that the controls are operating as designed related to subrecipient monitoring compliance. Recommendation – We recommend that the agencies maintain sufficient documentation to evidence its internal controls over the risk assessment and monitoring of subrecipients. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – While DMPSJ doesn’t agree that it is out of compliance, DMPSJ will ensure documentation is maintained regarding its oversight of grant management. ONSE acknowledges and accepts the finding that the subrecipient failed to submit their monthly and performance reports. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section. BDO’s Response – We have reviewed management’s response and our finding remains as indicated.
Reference Number: 2024-011 Prior Year Finding: No Federal Agency: U.S. Department of Transportation State Agency: Agency of Transportation Federal Program: Highway Planning and Construction Assistance Listing Number: 20.205 Award Number and Year: FFY2023 – FFY2024 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR section 200.332, the following requirements are imposed on pass-through entities: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Vermont Agency of Transportation (VTrans) omitted required federal award information from subawards it issued in the program and did not adequately monitor subrecipients. Context: Nineteen subawards were selected for testing and the following exceptions were noted: • For 16 of 19 subawards selected for testing, the federal award date was not included on the subaward agreement. • For 1 of 19 subawards selected for testing, the last on-site subrecipient monitoring visit was performed in FY 2019 and the next on-site monitoring did not take place until FY 2024. Per the VTrans subrecipient monitoring plan, on-site monitoring must be performed no less than every three years. Cause: Procedures and internal controls were not sufficient to ensure that subawards included all required federal information. Although VTrans subsequently modified its subaward issuance process, controls in effect during the audit period were not sufficient to ensure that subawards included all required information. Procedures and internal controls were also not sufficient to ensure that timely on-site monitoring visits were performed in accordance with its monitoring plan. Effect: Excluding the required federal grant award information at the time of subaward issuance may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports. Failure to conduct adequate subrecipient monitoring may result in a failure of VTrans to detect that subawards are used for unauthorized purposes, are managed in violation of the terms and conditions of the subawards, or that subaward performance goals are not achieved. There is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by VTrans personnel on a timely basis. Questioned costs: Undetermined. Recommendation: VTrans should review and enhance internal controls and procedures to ensure that all required federal award information is included in subawards and that on-site subrecipient monitoring is conducted timely per the terms of its subrecipient monitoring plan. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-002 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2023-24 Name of Department: County Executive Office Department of Aging Department of Arts and Culture Department of Economic Opportunity Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance; Material Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332(e), all pass-through entities (PTE) must: Monitor the activities of the subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notification from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue management decision for audit findings pertaining to only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition During our audit of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, we selected fifteen (15) subrecipients with active contracts with the County during FY 2023-24. We noted for seven (7) contracts administered by the Departments of Aging, Arts and Culture, and Economic Opportunity, the departments did not perform subrecipient monitoring related to the CSLFRF program during FY 2023-24. This is a repeat finding of 2023-009. Cause Due to the urgency to implement the CSLFRF program, the departments needed more time to enter into contracts with independent CPA firms to monitor the CSLFRF subrecipients and document the reviews in accordance with subrecipient monitoring requirements. Effect Failure to document monitoring results in noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332(e). Questioned Costs Questioned costs were not determinable. Context Of the fifteen (15) subrecipients selected for testing, which totaled $20,981,306, from a population of 76 subrecipients with expenditures totaling $101,950,949, the departments did not perform subrecipient monitoring for seven (7) subrecipients with expenditures totaling $19,118,116. The sample was not a statistically valid sample. Recommendation We recommend the County monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes and maintain sufficient records of monitoring subrecipients in accordance with subrecipient monitoring requirements.
Reference Number: 2024-002 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2023-24 Name of Department: County Executive Office Department of Aging Department of Arts and Culture Department of Economic Opportunity Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance; Material Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332(e), all pass-through entities (PTE) must: Monitor the activities of the subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notification from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue management decision for audit findings pertaining to only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition During our audit of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, we selected fifteen (15) subrecipients with active contracts with the County during FY 2023-24. We noted for seven (7) contracts administered by the Departments of Aging, Arts and Culture, and Economic Opportunity, the departments did not perform subrecipient monitoring related to the CSLFRF program during FY 2023-24. This is a repeat finding of 2023-009. Cause Due to the urgency to implement the CSLFRF program, the departments needed more time to enter into contracts with independent CPA firms to monitor the CSLFRF subrecipients and document the reviews in accordance with subrecipient monitoring requirements. Effect Failure to document monitoring results in noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332(e). Questioned Costs Questioned costs were not determinable. Context Of the fifteen (15) subrecipients selected for testing, which totaled $20,981,306, from a population of 76 subrecipients with expenditures totaling $101,950,949, the departments did not perform subrecipient monitoring for seven (7) subrecipients with expenditures totaling $19,118,116. The sample was not a statistically valid sample. Recommendation We recommend the County monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes and maintain sufficient records of monitoring subrecipients in accordance with subrecipient monitoring requirements.
Assistance Listings number and name: 84.002 Adult Education—Basic Grants to States Award numbers and years: 24FABASC-412421-01A, July 1, 2023 through June 30, 2024; 24FIELCC-412421-01A, July 1, 2023 through June 30, 2024; 24FIETCO-412421-01A, July 1, 2023 through June 30, 2024; 24FPRLEC-412421-01A, July 1, 2023 through June 30, 2024; 24FIECTC-412421-01A, July 1, 2023 through June 30, 2024 Compliance requirements: Activities Allowed or Unallowed and Allowable Costs / Cost Principles Questioned costs: $52,754 Assistance Listings number and name: 84.031 Higher Education—Institutional Aid Award numbers and years: P031S160090, October 1, 2016 through September 30, 2023; P031S190167, October 1, 2019 through September 30, 2024; P031S200096, October 1, 2020 through September 30, 2025; P031S200281, October 1, 2020 through September 30, 2025; P031C210057, October 1, 2021 through September 30, 2026; P031C210077, October 1, 2021 through September 30, 2026; P031S220015, October 1, 2022 through September 30, 2027; P031S220179, October 1, 2022 through September 30, 2027; P031A230147, October 1, 2023 through September 30, 2028; P031S230158, October 1, 2023 through September 30, 2028 Compliance requirements: Activities allowed or unallowed Questioned costs: $20,411 Federal agency: U.S. Department of Education Total questioned costs: $73,165 Condition—Contrary to federal regulations, State law, and District policies, the District did not always retain documentation supporting the Adult Education—Basic Grants to States and Higher Education—Institutional Aid programs’ payroll costs or approve employee time sheets after the work was performed for these programs. Specifically, the District could not provide documentation to support employees’ pay rates and authorization to perform work for these programs, such as offer letters, contracts, and personnel action forms, or did not approve employee time sheets after the work was performed for 22 of 54 payroll transactions we tested totaling $73,165. See finding 2024-01 in our Report on Internal Controls and Compliance for a similar finding related to the District not reviewing or approving employee timesheets.1 Also, see Table 1 on the next page for further information. Table 1 Summary of the $73,165 of payroll costs the District did not properly support or approve Fiscal year 2024 84.002 Adult Education—Basic Grants to States 84.031 Higher Education—Institutional Aid Total for both programs Total employees tested 35 19 54 Total employees with unsupported pay rates and lack of authorization to perform work for the programs 7 1 8 Total unsupported payroll costs $52,366 $9,636 $62,002 Total employee time sheets lacking approval after the work was performed2 2 12 14 Total unapproved payroll costs $388 $10,775 $11,163 Total number of employees with unsupported or unapproved payroll costs 9 13 22 Total salaries not supported $52,754 $20,411 $73,165 Effect—The District’s failure to retain documentation supporting payroll costs and approve time sheets increased the risk that the $52,754 for the Adult Education—Basic Grants to States and $20,411 for the Higher Education—Institutional Aid programs may not have been spent in accordance with their award terms and conditions. Consequently, the District may be required to return these monies to the federal agency in accordance with federal requirements.3 Further, see Table 2 for information on the overall payroll costs per program during fiscal year 2024 that are at an increased risk of not being spent in accordance with the award terms and conditions. Finally, the District is at risk that this finding applies to other federal programs it administers. Table 2 Calculation of percent of payroll costs to total program expenditures Fiscal year 2024 84.002 Adult Education—Basic Grants to States 84.031 Higher Education—Institutional Aid Total number of employees 279 214 Total payroll costs $3,613,133 $1,984,462 Total program costs $5,026,228 $6,696,263 % of payroll costs to total program costs 72% 30% Cause—The District’s management reported that it did not retain documentation to support employees’ pay rates and authorization to perform work for the federal programs for employees hired prior to 2018 as they were archived and support was no longer available, and some offers for temporary employees were made verbally over the phone and never documented. The District’s policies and procedures lack requirements to document all employment offers, including temporary employment offers. Additionally, as discussed in finding 2024-01 in our Report on Internal Controls and Compliance, some supervisors did not follow District policies and procedures requiring employees’ time sheets to be reviewed and approved either before processing payroll or within 3 business days after receiving a payroll email notification that the employee’s time sheet needed approval.1 Finally, District management did not sufficiently monitor whether each college’s Human Resources Department was enforcing these policies and procedures or verifying that supervisors reviewed and approved employees’ time sheets, as required. Criteria—Federal regulation requires the District to maintain records for salaries and wages charged to federal awards that accurately reflect the work performed to ensure they are accurate, allowable, and properly allocated (2 CFR §200.430[g][1][i]). Also, federal regulation, similar to State law and the District’s record retention policies, requires the District to retain all public records, including those contained in personnel files, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §200.334).4,5 Further, the District’s written procedures require each employee’s time sheet to be reviewed and approved by the employee’s supervisor either before processing payroll or within 3 business days from receiving a payroll email notification that the employee’s time sheet needs approval. Additionally, each college’s Human Resources Department is responsible for verifying that supervisors review and approve time sheets timely.6 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 District should: 1. Retain documentation for all payroll costs, such as employment agreements or acceptance letters, to demonstrate employees’ salaries and wages are authorized to be charged to federal programs and spent in accordance with the programs’ award terms and conditions. 2. Review the fiscal year 2024 payroll costs for the Adult Education—Basic Grants to States and Higher Education—Institutional Aid programs to ensure they were properly supported and spent in accordance with the award terms and conditions and coordinate with the U.S. Department of Education, as necessary, to adjust future federal reimbursement requests or repay any unallowable costs the District charged to the programs. 3. Enforce and train employees on District written procedures and requirements to: a. Retain all public records, including those contained in personnel files, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor. b. Ensure supervisors review and approve employees’ time sheets, either before payroll is processed or within 3 business days from receiving the payroll email notification that a time sheet needs approval, to verify employees accurately reported their time worked. This review should be performed after the employee performed the work to ensure the payroll costs charged to the programs accurately reflect the work performed and are accurate, allowable, and properly allocated. 4. Update District written procedures to require documentation of all employment offers, including offers for temporary employees. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Arizona Auditor General. (2024). Report on Internal Control and Compliance, June 30, 2024. Phoenix, AZ. https://www.azauditor.gov/sites/default/files/2025-02/MaricopaCountyCommunityCollegeDistrictJune30_2024ReportOnInternalControlAndCompliance.pdf 2 The 14 employee time sheets lacking approval after the work was performed includes 5 time sheets totaling $6,917 for the Higher Education—Institutional Aid program that were never approved by a supervisor and 2 time sheets totaling $388 for the Adult Education—Basic Grants to States program and 7 time sheets totaling $3,858 for the Higher Education—Institutional Aid program that were approved by a supervisor between 1 and 7 days prior to the work being performed by the employee. 3 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the District, 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). 4 Maricopa County Community College District (MCCCD). (2023). Staff Policy Manual. 5 Arizona State Library, Archives and Public Records. (2023) General Retention Schedule Created for All Public Bodies. Retrieved 3/12/25 from https://apps.azlibrary.gov/files/docs/all_general_schedules_searchable.pdf 6 Maricopa County Community College District (MCCCD). Version 1.1 (2019). Monitoring Time Approvals: Monitoring Procedures.
Assistance Listings number and name: 84.002 Adult Education—Basic Grants to States Award numbers and years: 24FABASC-412421-01A, July 1, 2023 through June 30, 2024; 24FIELCC-412421-01A, July 1, 2023 through June 30, 2024; 24FIETCO-412421-01A, July 1, 2023 through June 30, 2024; 24FPRLEC-412421-01A, July 1, 2023 through June 30, 2024; 24FIECTC-412421-01A, July 1, 2023 through June 30, 2024 Compliance requirements: Activities Allowed or Unallowed and Allowable Costs / Cost Principles Questioned costs: $52,754 Assistance Listings number and name: 84.031 Higher Education—Institutional Aid Award numbers and years: P031S160090, October 1, 2016 through September 30, 2023; P031S190167, October 1, 2019 through September 30, 2024; P031S200096, October 1, 2020 through September 30, 2025; P031S200281, October 1, 2020 through September 30, 2025; P031C210057, October 1, 2021 through September 30, 2026; P031C210077, October 1, 2021 through September 30, 2026; P031S220015, October 1, 2022 through September 30, 2027; P031S220179, October 1, 2022 through September 30, 2027; P031A230147, October 1, 2023 through September 30, 2028; P031S230158, October 1, 2023 through September 30, 2028 Compliance requirements: Activities allowed or unallowed Questioned costs: $20,411 Federal agency: U.S. Department of Education Total questioned costs: $73,165 Condition—Contrary to federal regulations, State law, and District policies, the District did not always retain documentation supporting the Adult Education—Basic Grants to States and Higher Education—Institutional Aid programs’ payroll costs or approve employee time sheets after the work was performed for these programs. Specifically, the District could not provide documentation to support employees’ pay rates and authorization to perform work for these programs, such as offer letters, contracts, and personnel action forms, or did not approve employee time sheets after the work was performed for 22 of 54 payroll transactions we tested totaling $73,165. See finding 2024-01 in our Report on Internal Controls and Compliance for a similar finding related to the District not reviewing or approving employee timesheets.1 Also, see Table 1 on the next page for further information. Table 1 Summary of the $73,165 of payroll costs the District did not properly support or approve Fiscal year 2024 84.002 Adult Education—Basic Grants to States 84.031 Higher Education—Institutional Aid Total for both programs Total employees tested 35 19 54 Total employees with unsupported pay rates and lack of authorization to perform work for the programs 7 1 8 Total unsupported payroll costs $52,366 $9,636 $62,002 Total employee time sheets lacking approval after the work was performed2 2 12 14 Total unapproved payroll costs $388 $10,775 $11,163 Total number of employees with unsupported or unapproved payroll costs 9 13 22 Total salaries not supported $52,754 $20,411 $73,165 Effect—The District’s failure to retain documentation supporting payroll costs and approve time sheets increased the risk that the $52,754 for the Adult Education—Basic Grants to States and $20,411 for the Higher Education—Institutional Aid programs may not have been spent in accordance with their award terms and conditions. Consequently, the District may be required to return these monies to the federal agency in accordance with federal requirements.3 Further, see Table 2 for information on the overall payroll costs per program during fiscal year 2024 that are at an increased risk of not being spent in accordance with the award terms and conditions. Finally, the District is at risk that this finding applies to other federal programs it administers. Table 2 Calculation of percent of payroll costs to total program expenditures Fiscal year 2024 84.002 Adult Education—Basic Grants to States 84.031 Higher Education—Institutional Aid Total number of employees 279 214 Total payroll costs $3,613,133 $1,984,462 Total program costs $5,026,228 $6,696,263 % of payroll costs to total program costs 72% 30% Cause—The District’s management reported that it did not retain documentation to support employees’ pay rates and authorization to perform work for the federal programs for employees hired prior to 2018 as they were archived and support was no longer available, and some offers for temporary employees were made verbally over the phone and never documented. The District’s policies and procedures lack requirements to document all employment offers, including temporary employment offers. Additionally, as discussed in finding 2024-01 in our Report on Internal Controls and Compliance, some supervisors did not follow District policies and procedures requiring employees’ time sheets to be reviewed and approved either before processing payroll or within 3 business days after receiving a payroll email notification that the employee’s time sheet needed approval.1 Finally, District management did not sufficiently monitor whether each college’s Human Resources Department was enforcing these policies and procedures or verifying that supervisors reviewed and approved employees’ time sheets, as required. Criteria—Federal regulation requires the District to maintain records for salaries and wages charged to federal awards that accurately reflect the work performed to ensure they are accurate, allowable, and properly allocated (2 CFR §200.430[g][1][i]). Also, federal regulation, similar to State law and the District’s record retention policies, requires the District to retain all public records, including those contained in personnel files, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §200.334).4,5 Further, the District’s written procedures require each employee’s time sheet to be reviewed and approved by the employee’s supervisor either before processing payroll or within 3 business days from receiving a payroll email notification that the employee’s time sheet needs approval. Additionally, each college’s Human Resources Department is responsible for verifying that supervisors review and approve time sheets timely.6 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 District should: 1. Retain documentation for all payroll costs, such as employment agreements or acceptance letters, to demonstrate employees’ salaries and wages are authorized to be charged to federal programs and spent in accordance with the programs’ award terms and conditions. 2. Review the fiscal year 2024 payroll costs for the Adult Education—Basic Grants to States and Higher Education—Institutional Aid programs to ensure they were properly supported and spent in accordance with the award terms and conditions and coordinate with the U.S. Department of Education, as necessary, to adjust future federal reimbursement requests or repay any unallowable costs the District charged to the programs. 3. Enforce and train employees on District written procedures and requirements to: a. Retain all public records, including those contained in personnel files, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor. b. Ensure supervisors review and approve employees’ time sheets, either before payroll is processed or within 3 business days from receiving the payroll email notification that a time sheet needs approval, to verify employees accurately reported their time worked. This review should be performed after the employee performed the work to ensure the payroll costs charged to the programs accurately reflect the work performed and are accurate, allowable, and properly allocated. 4. Update District written procedures to require documentation of all employment offers, including offers for temporary employees. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Arizona Auditor General. (2024). Report on Internal Control and Compliance, June 30, 2024. Phoenix, AZ. https://www.azauditor.gov/sites/default/files/2025-02/MaricopaCountyCommunityCollegeDistrictJune30_2024ReportOnInternalControlAndCompliance.pdf 2 The 14 employee time sheets lacking approval after the work was performed includes 5 time sheets totaling $6,917 for the Higher Education—Institutional Aid program that were never approved by a supervisor and 2 time sheets totaling $388 for the Adult Education—Basic Grants to States program and 7 time sheets totaling $3,858 for the Higher Education—Institutional Aid program that were approved by a supervisor between 1 and 7 days prior to the work being performed by the employee. 3 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the District, 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). 4 Maricopa County Community College District (MCCCD). (2023). Staff Policy Manual. 5 Arizona State Library, Archives and Public Records. (2023) General Retention Schedule Created for All Public Bodies. Retrieved 3/12/25 from https://apps.azlibrary.gov/files/docs/all_general_schedules_searchable.pdf 6 Maricopa County Community College District (MCCCD). Version 1.1 (2019). Monitoring Time Approvals: Monitoring Procedures.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Reference Number: 2024-011 Prior Year Finding: No Federal Agency: U.S. Department of Transportation State Agency: Agency of Transportation Federal Program: Highway Planning and Construction Assistance Listing Number: 20.205 Award Number and Year: FFY2023 – FFY2024 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR section 200.332, the following requirements are imposed on pass-through entities: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Vermont Agency of Transportation (VTrans) omitted required federal award information from subawards it issued in the program and did not adequately monitor subrecipients. Context: Nineteen subawards were selected for testing and the following exceptions were noted: • For 16 of 19 subawards selected for testing, the federal award date was not included on the subaward agreement. • For 1 of 19 subawards selected for testing, the last on-site subrecipient monitoring visit was performed in FY 2019 and the next on-site monitoring did not take place until FY 2024. Per the VTrans subrecipient monitoring plan, on-site monitoring must be performed no less than every three years. Cause: Procedures and internal controls were not sufficient to ensure that subawards included all required federal information. Although VTrans subsequently modified its subaward issuance process, controls in effect during the audit period were not sufficient to ensure that subawards included all required information. Procedures and internal controls were also not sufficient to ensure that timely on-site monitoring visits were performed in accordance with its monitoring plan. Effect: Excluding the required federal grant award information at the time of subaward issuance may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports. Failure to conduct adequate subrecipient monitoring may result in a failure of VTrans to detect that subawards are used for unauthorized purposes, are managed in violation of the terms and conditions of the subawards, or that subaward performance goals are not achieved. There is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by VTrans personnel on a timely basis. Questioned costs: Undetermined. Recommendation: VTrans should review and enhance internal controls and procedures to ensure that all required federal award information is included in subawards and that on-site subrecipient monitoring is conducted timely per the terms of its subrecipient monitoring plan. Views of responsible officials: Management agrees with the finding.
Reference Number: 2024-002 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2023-24 Name of Department: County Executive Office Department of Aging Department of Arts and Culture Department of Economic Opportunity Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance; Material Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332(e), all pass-through entities (PTE) must: Monitor the activities of the subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notification from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue management decision for audit findings pertaining to only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition During our audit of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, we selected fifteen (15) subrecipients with active contracts with the County during FY 2023-24. We noted for seven (7) contracts administered by the Departments of Aging, Arts and Culture, and Economic Opportunity, the departments did not perform subrecipient monitoring related to the CSLFRF program during FY 2023-24. This is a repeat finding of 2023-009. Cause Due to the urgency to implement the CSLFRF program, the departments needed more time to enter into contracts with independent CPA firms to monitor the CSLFRF subrecipients and document the reviews in accordance with subrecipient monitoring requirements. Effect Failure to document monitoring results in noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332(e). Questioned Costs Questioned costs were not determinable. Context Of the fifteen (15) subrecipients selected for testing, which totaled $20,981,306, from a population of 76 subrecipients with expenditures totaling $101,950,949, the departments did not perform subrecipient monitoring for seven (7) subrecipients with expenditures totaling $19,118,116. The sample was not a statistically valid sample. Recommendation We recommend the County monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes and maintain sufficient records of monitoring subrecipients in accordance with subrecipient monitoring requirements.
Reference Number: 2024-002 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2023-24 Name of Department: County Executive Office Department of Aging Department of Arts and Culture Department of Economic Opportunity Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance; Material Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332(e), all pass-through entities (PTE) must: Monitor the activities of the subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notification from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue management decision for audit findings pertaining to only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition During our audit of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, we selected fifteen (15) subrecipients with active contracts with the County during FY 2023-24. We noted for seven (7) contracts administered by the Departments of Aging, Arts and Culture, and Economic Opportunity, the departments did not perform subrecipient monitoring related to the CSLFRF program during FY 2023-24. This is a repeat finding of 2023-009. Cause Due to the urgency to implement the CSLFRF program, the departments needed more time to enter into contracts with independent CPA firms to monitor the CSLFRF subrecipients and document the reviews in accordance with subrecipient monitoring requirements. Effect Failure to document monitoring results in noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332(e). Questioned Costs Questioned costs were not determinable. Context Of the fifteen (15) subrecipients selected for testing, which totaled $20,981,306, from a population of 76 subrecipients with expenditures totaling $101,950,949, the departments did not perform subrecipient monitoring for seven (7) subrecipients with expenditures totaling $19,118,116. The sample was not a statistically valid sample. Recommendation We recommend the County monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes and maintain sufficient records of monitoring subrecipients in accordance with subrecipient monitoring requirements.
Assistance Listings number and name: 84.002 Adult Education—Basic Grants to States Award numbers and years: 24FABASC-412421-01A, July 1, 2023 through June 30, 2024; 24FIELCC-412421-01A, July 1, 2023 through June 30, 2024; 24FIETCO-412421-01A, July 1, 2023 through June 30, 2024; 24FPRLEC-412421-01A, July 1, 2023 through June 30, 2024; 24FIECTC-412421-01A, July 1, 2023 through June 30, 2024 Compliance requirements: Activities Allowed or Unallowed and Allowable Costs / Cost Principles Questioned costs: $52,754 Assistance Listings number and name: 84.031 Higher Education—Institutional Aid Award numbers and years: P031S160090, October 1, 2016 through September 30, 2023; P031S190167, October 1, 2019 through September 30, 2024; P031S200096, October 1, 2020 through September 30, 2025; P031S200281, October 1, 2020 through September 30, 2025; P031C210057, October 1, 2021 through September 30, 2026; P031C210077, October 1, 2021 through September 30, 2026; P031S220015, October 1, 2022 through September 30, 2027; P031S220179, October 1, 2022 through September 30, 2027; P031A230147, October 1, 2023 through September 30, 2028; P031S230158, October 1, 2023 through September 30, 2028 Compliance requirements: Activities allowed or unallowed Questioned costs: $20,411 Federal agency: U.S. Department of Education Total questioned costs: $73,165 Condition—Contrary to federal regulations, State law, and District policies, the District did not always retain documentation supporting the Adult Education—Basic Grants to States and Higher Education—Institutional Aid programs’ payroll costs or approve employee time sheets after the work was performed for these programs. Specifically, the District could not provide documentation to support employees’ pay rates and authorization to perform work for these programs, such as offer letters, contracts, and personnel action forms, or did not approve employee time sheets after the work was performed for 22 of 54 payroll transactions we tested totaling $73,165. See finding 2024-01 in our Report on Internal Controls and Compliance for a similar finding related to the District not reviewing or approving employee timesheets.1 Also, see Table 1 on the next page for further information. Table 1 Summary of the $73,165 of payroll costs the District did not properly support or approve Fiscal year 2024 84.002 Adult Education—Basic Grants to States 84.031 Higher Education—Institutional Aid Total for both programs Total employees tested 35 19 54 Total employees with unsupported pay rates and lack of authorization to perform work for the programs 7 1 8 Total unsupported payroll costs $52,366 $9,636 $62,002 Total employee time sheets lacking approval after the work was performed2 2 12 14 Total unapproved payroll costs $388 $10,775 $11,163 Total number of employees with unsupported or unapproved payroll costs 9 13 22 Total salaries not supported $52,754 $20,411 $73,165 Effect—The District’s failure to retain documentation supporting payroll costs and approve time sheets increased the risk that the $52,754 for the Adult Education—Basic Grants to States and $20,411 for the Higher Education—Institutional Aid programs may not have been spent in accordance with their award terms and conditions. Consequently, the District may be required to return these monies to the federal agency in accordance with federal requirements.3 Further, see Table 2 for information on the overall payroll costs per program during fiscal year 2024 that are at an increased risk of not being spent in accordance with the award terms and conditions. Finally, the District is at risk that this finding applies to other federal programs it administers. Table 2 Calculation of percent of payroll costs to total program expenditures Fiscal year 2024 84.002 Adult Education—Basic Grants to States 84.031 Higher Education—Institutional Aid Total number of employees 279 214 Total payroll costs $3,613,133 $1,984,462 Total program costs $5,026,228 $6,696,263 % of payroll costs to total program costs 72% 30% Cause—The District’s management reported that it did not retain documentation to support employees’ pay rates and authorization to perform work for the federal programs for employees hired prior to 2018 as they were archived and support was no longer available, and some offers for temporary employees were made verbally over the phone and never documented. The District’s policies and procedures lack requirements to document all employment offers, including temporary employment offers. Additionally, as discussed in finding 2024-01 in our Report on Internal Controls and Compliance, some supervisors did not follow District policies and procedures requiring employees’ time sheets to be reviewed and approved either before processing payroll or within 3 business days after receiving a payroll email notification that the employee’s time sheet needed approval.1 Finally, District management did not sufficiently monitor whether each college’s Human Resources Department was enforcing these policies and procedures or verifying that supervisors reviewed and approved employees’ time sheets, as required. Criteria—Federal regulation requires the District to maintain records for salaries and wages charged to federal awards that accurately reflect the work performed to ensure they are accurate, allowable, and properly allocated (2 CFR §200.430[g][1][i]). Also, federal regulation, similar to State law and the District’s record retention policies, requires the District to retain all public records, including those contained in personnel files, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §200.334).4,5 Further, the District’s written procedures require each employee’s time sheet to be reviewed and approved by the employee’s supervisor either before processing payroll or within 3 business days from receiving a payroll email notification that the employee’s time sheet needs approval. Additionally, each college’s Human Resources Department is responsible for verifying that supervisors review and approve time sheets timely.6 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 District should: 1. Retain documentation for all payroll costs, such as employment agreements or acceptance letters, to demonstrate employees’ salaries and wages are authorized to be charged to federal programs and spent in accordance with the programs’ award terms and conditions. 2. Review the fiscal year 2024 payroll costs for the Adult Education—Basic Grants to States and Higher Education—Institutional Aid programs to ensure they were properly supported and spent in accordance with the award terms and conditions and coordinate with the U.S. Department of Education, as necessary, to adjust future federal reimbursement requests or repay any unallowable costs the District charged to the programs. 3. Enforce and train employees on District written procedures and requirements to: a. Retain all public records, including those contained in personnel files, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor. b. Ensure supervisors review and approve employees’ time sheets, either before payroll is processed or within 3 business days from receiving the payroll email notification that a time sheet needs approval, to verify employees accurately reported their time worked. This review should be performed after the employee performed the work to ensure the payroll costs charged to the programs accurately reflect the work performed and are accurate, allowable, and properly allocated. 4. Update District written procedures to require documentation of all employment offers, including offers for temporary employees. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Arizona Auditor General. (2024). Report on Internal Control and Compliance, June 30, 2024. Phoenix, AZ. https://www.azauditor.gov/sites/default/files/2025-02/MaricopaCountyCommunityCollegeDistrictJune30_2024ReportOnInternalControlAndCompliance.pdf 2 The 14 employee time sheets lacking approval after the work was performed includes 5 time sheets totaling $6,917 for the Higher Education—Institutional Aid program that were never approved by a supervisor and 2 time sheets totaling $388 for the Adult Education—Basic Grants to States program and 7 time sheets totaling $3,858 for the Higher Education—Institutional Aid program that were approved by a supervisor between 1 and 7 days prior to the work being performed by the employee. 3 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the District, 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). 4 Maricopa County Community College District (MCCCD). (2023). Staff Policy Manual. 5 Arizona State Library, Archives and Public Records. (2023) General Retention Schedule Created for All Public Bodies. Retrieved 3/12/25 from https://apps.azlibrary.gov/files/docs/all_general_schedules_searchable.pdf 6 Maricopa County Community College District (MCCCD). Version 1.1 (2019). Monitoring Time Approvals: Monitoring Procedures.
Assistance Listings number and name: 84.002 Adult Education—Basic Grants to States Award numbers and years: 24FABASC-412421-01A, July 1, 2023 through June 30, 2024; 24FIELCC-412421-01A, July 1, 2023 through June 30, 2024; 24FIETCO-412421-01A, July 1, 2023 through June 30, 2024; 24FPRLEC-412421-01A, July 1, 2023 through June 30, 2024; 24FIECTC-412421-01A, July 1, 2023 through June 30, 2024 Compliance requirements: Activities Allowed or Unallowed and Allowable Costs / Cost Principles Questioned costs: $52,754 Assistance Listings number and name: 84.031 Higher Education—Institutional Aid Award numbers and years: P031S160090, October 1, 2016 through September 30, 2023; P031S190167, October 1, 2019 through September 30, 2024; P031S200096, October 1, 2020 through September 30, 2025; P031S200281, October 1, 2020 through September 30, 2025; P031C210057, October 1, 2021 through September 30, 2026; P031C210077, October 1, 2021 through September 30, 2026; P031S220015, October 1, 2022 through September 30, 2027; P031S220179, October 1, 2022 through September 30, 2027; P031A230147, October 1, 2023 through September 30, 2028; P031S230158, October 1, 2023 through September 30, 2028 Compliance requirements: Activities allowed or unallowed Questioned costs: $20,411 Federal agency: U.S. Department of Education Total questioned costs: $73,165 Condition—Contrary to federal regulations, State law, and District policies, the District did not always retain documentation supporting the Adult Education—Basic Grants to States and Higher Education—Institutional Aid programs’ payroll costs or approve employee time sheets after the work was performed for these programs. Specifically, the District could not provide documentation to support employees’ pay rates and authorization to perform work for these programs, such as offer letters, contracts, and personnel action forms, or did not approve employee time sheets after the work was performed for 22 of 54 payroll transactions we tested totaling $73,165. See finding 2024-01 in our Report on Internal Controls and Compliance for a similar finding related to the District not reviewing or approving employee timesheets.1 Also, see Table 1 on the next page for further information. Table 1 Summary of the $73,165 of payroll costs the District did not properly support or approve Fiscal year 2024 84.002 Adult Education—Basic Grants to States 84.031 Higher Education—Institutional Aid Total for both programs Total employees tested 35 19 54 Total employees with unsupported pay rates and lack of authorization to perform work for the programs 7 1 8 Total unsupported payroll costs $52,366 $9,636 $62,002 Total employee time sheets lacking approval after the work was performed2 2 12 14 Total unapproved payroll costs $388 $10,775 $11,163 Total number of employees with unsupported or unapproved payroll costs 9 13 22 Total salaries not supported $52,754 $20,411 $73,165 Effect—The District’s failure to retain documentation supporting payroll costs and approve time sheets increased the risk that the $52,754 for the Adult Education—Basic Grants to States and $20,411 for the Higher Education—Institutional Aid programs may not have been spent in accordance with their award terms and conditions. Consequently, the District may be required to return these monies to the federal agency in accordance with federal requirements.3 Further, see Table 2 for information on the overall payroll costs per program during fiscal year 2024 that are at an increased risk of not being spent in accordance with the award terms and conditions. Finally, the District is at risk that this finding applies to other federal programs it administers. Table 2 Calculation of percent of payroll costs to total program expenditures Fiscal year 2024 84.002 Adult Education—Basic Grants to States 84.031 Higher Education—Institutional Aid Total number of employees 279 214 Total payroll costs $3,613,133 $1,984,462 Total program costs $5,026,228 $6,696,263 % of payroll costs to total program costs 72% 30% Cause—The District’s management reported that it did not retain documentation to support employees’ pay rates and authorization to perform work for the federal programs for employees hired prior to 2018 as they were archived and support was no longer available, and some offers for temporary employees were made verbally over the phone and never documented. The District’s policies and procedures lack requirements to document all employment offers, including temporary employment offers. Additionally, as discussed in finding 2024-01 in our Report on Internal Controls and Compliance, some supervisors did not follow District policies and procedures requiring employees’ time sheets to be reviewed and approved either before processing payroll or within 3 business days after receiving a payroll email notification that the employee’s time sheet needed approval.1 Finally, District management did not sufficiently monitor whether each college’s Human Resources Department was enforcing these policies and procedures or verifying that supervisors reviewed and approved employees’ time sheets, as required. Criteria—Federal regulation requires the District to maintain records for salaries and wages charged to federal awards that accurately reflect the work performed to ensure they are accurate, allowable, and properly allocated (2 CFR §200.430[g][1][i]). Also, federal regulation, similar to State law and the District’s record retention policies, requires the District to retain all public records, including those contained in personnel files, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §200.334).4,5 Further, the District’s written procedures require each employee’s time sheet to be reviewed and approved by the employee’s supervisor either before processing payroll or within 3 business days from receiving a payroll email notification that the employee’s time sheet needs approval. Additionally, each college’s Human Resources Department is responsible for verifying that supervisors review and approve time sheets timely.6 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 District should: 1. Retain documentation for all payroll costs, such as employment agreements or acceptance letters, to demonstrate employees’ salaries and wages are authorized to be charged to federal programs and spent in accordance with the programs’ award terms and conditions. 2. Review the fiscal year 2024 payroll costs for the Adult Education—Basic Grants to States and Higher Education—Institutional Aid programs to ensure they were properly supported and spent in accordance with the award terms and conditions and coordinate with the U.S. Department of Education, as necessary, to adjust future federal reimbursement requests or repay any unallowable costs the District charged to the programs. 3. Enforce and train employees on District written procedures and requirements to: a. Retain all public records, including those contained in personnel files, related to a federal program for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor. b. Ensure supervisors review and approve employees’ time sheets, either before payroll is processed or within 3 business days from receiving the payroll email notification that a time sheet needs approval, to verify employees accurately reported their time worked. This review should be performed after the employee performed the work to ensure the payroll costs charged to the programs accurately reflect the work performed and are accurate, allowable, and properly allocated. 4. Update District written procedures to require documentation of all employment offers, including offers for temporary employees. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 Arizona Auditor General. (2024). Report on Internal Control and Compliance, June 30, 2024. Phoenix, AZ. https://www.azauditor.gov/sites/default/files/2025-02/MaricopaCountyCommunityCollegeDistrictJune30_2024ReportOnInternalControlAndCompliance.pdf 2 The 14 employee time sheets lacking approval after the work was performed includes 5 time sheets totaling $6,917 for the Higher Education—Institutional Aid program that were never approved by a supervisor and 2 time sheets totaling $388 for the Adult Education—Basic Grants to States program and 7 time sheets totaling $3,858 for the Higher Education—Institutional Aid program that were approved by a supervisor between 1 and 7 days prior to the work being performed by the employee. 3 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient, the District, 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). 4 Maricopa County Community College District (MCCCD). (2023). Staff Policy Manual. 5 Arizona State Library, Archives and Public Records. (2023) General Retention Schedule Created for All Public Bodies. Retrieved 3/12/25 from https://apps.azlibrary.gov/files/docs/all_general_schedules_searchable.pdf 6 Maricopa County Community College District (MCCCD). Version 1.1 (2019). Monitoring Time Approvals: Monitoring Procedures.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. 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. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-101 and was initially reported in fiscal year 2022. 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 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.
Criteria or specific requirement: Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. Subrecipient Monitoring and Management. §200.332 Requirements for pass-through entities (2 CFR 200.332): A pass-through entity must: (c) Evaluate each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient’s risk, a passthrough entity should consider the following: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to crosscutting audit findings in accordance with section §200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. California Code of Regulations. Title 5 Education. § 18023. Compliance Reviews of Contractors. (b) At least once every three (3) years and as resources permit, the California Department of Education shall conduct reviews at the contractor's office(s) and operating facility(ies) to determine the contractor's compliance with applicable laws, regulations or contractual provisions. Child Care and Development Fund (CCDF) Plan for State/Territory California FFY 2022-24, Amendment 4. Chapter 8 Ensure Grantee Program Integrity and Accountability. 8.1 Internal Controls and Accountability Measures to Help Ensure Program Integrity. 8.1.1 Process to train about CCDF requirements and program integrity. States and territories are required to describe effective internal controls that are in place to ensure program integrity and accountability (98.68(a)), including processes to train child care providers and staff of the Lead Agency and other agencies engaged in the administration of CCDF about program requirements and integrity. v. Monitor and assess policy implementation on an ongoing basis. The Lead Agency conducts announced Categorical Program Monitoring (CPM)/Contract Monitoring Reviews (CMRs) for each contractor on a three- or four-year cycle for non-LEAs and LEAs respectively. The Lead Agency’s Governance and Administration Unit (GAU) conducts ongoing review of individual contractors by sampling the eligibility and need documentation in family files to estimate and reduce error rates. Additionally, the Lead Agency provides ongoing training and technical assistance to contractors in regional sessions, in one-on-one sessions, and/or in cluster with webinars or during face to-face presentations. These sessions address CCDF program administration, requirements, and integrity Condition: We selected 60 subrecipient contracts (21 local educational agency (LEA) contracts and 39 non-LEA contracts) from 60 subrecipient entities and tested compliance with subrecipient monitoring requirements. We noted the following: LEA • 2 LEA contracts/contractors had no record of on-site monitoring over five years. Non-LEA • 3 non-LEA contracts/contractors had no records available to demonstrate risk assessment of the contractor. • 11 non-LEA contracts/contractors had no record of on-site monitoring over five years. Questioned costs: None Context: See “Condition.” Cause: In fiscal year 2021, the administration of the CCDF Cluster program was transitioned from the California Department of Education (CDE) to CDSS. CDSS has been in the process of revising certain policies and procedures, including contractor monitoring. In addition, certain records related to CDE monitoring activities for the contracts selected were unavailable for review. Effect: CDSS is at risk for contractor noncompliance if monitoring procedures are not properly designed or executed, and/or documents demonstrating monitoring are not maintained. Repeat Finding: This was reported in the previous year as finding 2023-012. Recommendation: To enhance the effectiveness of the annual risk assessment process, we recommend a thorough evaluation that focuses on the identification and inclusion of all subrecipients and defined risk criteria as mandated in 2 CFR 200.332. Furthermore, it is crucial to establish and document a transparent basis for risk profiling that directly correlates such profiles with compliance monitoring activities across fiscal, program, and single audit requirements. Furthermore, we recommend CDSS perform a comprehensive post-transition review to ensure all monitoring responsibilities transferred from CDE have been fully identified and assigned. This review should validate robust mechanisms are in place for the accurate documentation and proper retention of records. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria: 2 CFR 200.332 notes, “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition: The Organization noted they do not request and review audited financial statements for all subrecipients. Questioned Costs: N/A Cause and Effect: Without reviewing audited financial statements, subrecipients may have deficiencies in internal control or compliance which could lead to future unallowable expenditures to be incurred. Recommendation: We recommend ACT evaluates policies and procedures to ensure appropriate monitoring is performed over all subrecipients and reviews audited financial statements for those subrecipients that are required to have an audit performed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.
Criteria: 2 CFR 200.332 notes, “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition: The Organization noted they do not request and review audited financial statements for all subrecipients. Questioned Costs: N/A Cause and Effect: Without reviewing audited financial statements, subrecipients may have deficiencies in internal control or compliance which could lead to future unallowable expenditures to be incurred. Recommendation: We recommend ACT evaluates policies and procedures to ensure appropriate monitoring is performed over all subrecipients and reviews audited financial statements for those subrecipients that are required to have an audit performed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.
Finding Number: 2023-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023- 01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Subrecipient Monitoring Condition: The Organization did not comply with any of the subrecipient monitoring and management requirements in accordance with 2 CFR Part 200.332. Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part 200.332 requires the pass-through entity must: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: 1. Federal award identification; 2. All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. 4. (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; 2. The de minimis indirect cost rate (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. (iii) 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. b. Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. d. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the passthrough entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: 1. Providing subrecipients with training and technical assistance on program-related matters; and 2. Performing on-site reviews of the subrecipient's program operations; 3. Arranging for agreed-upon-procedures engagements as described in § 200.425. f. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. h. Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. Cause: The Organization’s management was not aware of the subrecipient monitoring and management requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and management requirements, resulting in a material noncompliance and a material weakness in internal controls over compliance. Recommendation: We recommend the Organization implement systems and procedures to ensure compliance with the subrecipient monitoring and management compliance requirements. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2023-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023- 01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Subrecipient Monitoring Condition: The Organization did not comply with any of the subrecipient monitoring and management requirements in accordance with 2 CFR Part 200.332. Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part 200.332 requires the pass-through entity must: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: 1. Federal award identification; 2. All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. 4. (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; 2. The de minimis indirect cost rate (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. (iii) 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. b. Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. d. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the passthrough entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: 1. Providing subrecipients with training and technical assistance on program-related matters; and 2. Performing on-site reviews of the subrecipient's program operations; 3. Arranging for agreed-upon-procedures engagements as described in § 200.425. f. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. h. Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. Cause: The Organization’s management was not aware of the subrecipient monitoring and management requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and management requirements, resulting in a material noncompliance and a material weakness in internal controls over compliance. Recommendation: We recommend the Organization implement systems and procedures to ensure compliance with the subrecipient monitoring and management compliance requirements. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Criteria: 2 CFR 200.332 notes, “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition: The Organization noted they do not request and review audited financial statements for all subrecipients. Questioned Costs: N/A Cause and Effect: Without reviewing audited financial statements, subrecipients may have deficiencies in internal control or compliance which could lead to future unallowable expenditures to be incurred. Recommendation: We recommend ACT evaluates policies and procedures to ensure appropriate monitoring is performed over all subrecipients and reviews audited financial statements for those subrecipients that are required to have an audit performed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.
Criteria: 2 CFR 200.332 notes, “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition: The Organization noted they do not request and review audited financial statements for all subrecipients. Questioned Costs: N/A Cause and Effect: Without reviewing audited financial statements, subrecipients may have deficiencies in internal control or compliance which could lead to future unallowable expenditures to be incurred. Recommendation: We recommend ACT evaluates policies and procedures to ensure appropriate monitoring is performed over all subrecipients and reviews audited financial statements for those subrecipients that are required to have an audit performed. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.
Finding Number: 2023-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023- 01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Subrecipient Monitoring Condition: The Organization did not comply with any of the subrecipient monitoring and management requirements in accordance with 2 CFR Part 200.332. Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part 200.332 requires the pass-through entity must: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: 1. Federal award identification; 2. All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. 4. (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; 2. The de minimis indirect cost rate (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. (iii) 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. b. Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. d. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the passthrough entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: 1. Providing subrecipients with training and technical assistance on program-related matters; and 2. Performing on-site reviews of the subrecipient's program operations; 3. Arranging for agreed-upon-procedures engagements as described in § 200.425. f. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. h. Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. Cause: The Organization’s management was not aware of the subrecipient monitoring and management requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and management requirements, resulting in a material noncompliance and a material weakness in internal controls over compliance. Recommendation: We recommend the Organization implement systems and procedures to ensure compliance with the subrecipient monitoring and management compliance requirements. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2023-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Program: AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement – Direct Award (DHHS) – Award numbers: 1 NU38TO000023-01-00, 6 NU38TO000023- 01-01, 6 NU38OT000257-05-03 and 6 NU38OT000257C3 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Subrecipient Monitoring Condition: The Organization did not comply with any of the subrecipient monitoring and management requirements in accordance with 2 CFR Part 200.332. Criteria: The subrecipient monitoring and management requirements that are codified in 2 CFR Part 200.332 requires the pass-through entity must: a. Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: 1. Federal award identification; 2. All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; 3. Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. 4. (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: 1. The negotiated indirect cost rate between the pass-through entity and the subrecipient; 2. The de minimis indirect cost rate (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. (iii) 5. A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and 6. Appropriate terms and conditions concerning closeout of the subaward. b. Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. c. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. d. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: 1. Reviewing financial and performance reports required by the pass-through entity. 2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. 3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. 4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the passthrough entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. e. Depending upon the pass-through entity's assessment of risk posed by the subrecipient, the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: 1. Providing subrecipients with training and technical assistance on program-related matters; and 2. Performing on-site reviews of the subrecipient's program operations; 3. Arranging for agreed-upon-procedures engagements as described in § 200.425. f. Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. g. Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. h. Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. Cause: The Organization’s management was not aware of the subrecipient monitoring and management requirements. Effect: The Organization was not in compliance with any of the subrecipient monitoring and management requirements, resulting in a material noncompliance and a material weakness in internal controls over compliance. Recommendation: We recommend the Organization implement systems and procedures to ensure compliance with the subrecipient monitoring and management compliance requirements. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
2023-002 Subrecipient Monitoring Public Health Training Centers Program – Assistance Listing No. 93.516 Award Number: 1 T29HP46735‐01‐00 – Award Period: September 15, 2022 through September 14, 2025 Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health – Assistance Listing No. 93.967 Award Number: G2513_AG-1146 Amendment #1 – Award Period: February 1, 2023 through November 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Condition: During our testing of subrecipients, we noted documentation was not maintained demonstrating the Organization checked for suspension and debarment prior to contracting with subrecipients, subrecipient vs contractor determinations, evaluation of each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring, or obtaining/reviewing the most recent single audit reports for subrecipients to address findings related to a particular subaward. Criteria: According to 2 CFR 200.331, pass-through entities 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. 2 CFR 200.332 requires every subaward agreement include certain information including the subrecipient’s unique entity identifier (see paragraph (a) for a list of all required data elements); additionally, all pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations. 2 CFR 180.22 requires that contract awards not be made to parties listed on the government wide exclusions in the system for Award Management, which contains the names of parties debarred, suspended or otherwise excluded by agencies as well as parties declared ineligible under statutory or regulatory authority. Questioned Costs: None. Cause: The Organization did not have a process in place to ensure all required elements of subrecipient monitoring were documented and retained in their records. Effect: Inadequate monitoring procedures and records may not detect subrecipient noncompliance on a timely basis. This could result in the Organization entering into subrecipient agreements with organizations who are ineligible to receive federal funds or might otherwise not comply with federal laws and regulations. Recommendation: We recommend that management implement procedures to ensure that future subrecipient agreements are compared against all requirements in 2 CFR 200.331, 2 CFR 200.332, and 2 CFR 180.22 and that formal documentation of such considerations be maintained. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separately issued Corrective Action Plan.