State Agency: Illinois Governor’s Office of Management and Budget (GOMB) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Justice (DOJ), U.S. Department of Labor (DOL), U.S. Department of Transportation (DOT), U.S. Department of the Treasury (TREAS), U.S. Department of Education (ED), U.S. Department of Health and Human Services (USDHHS) Program Name: Special Supplemental Nutrition Program for Women, Infants and Children (WIC), Child and Adult Care Food Program (CACFP), Crime Victims Assistance Program, WIOA Cluster, Highway Planning and Construction, Emergency Rental Assistance Program, Homeowner Assistance Fund Program, Coronavirus State and Local Fiscal Recovery Funds, Title I Grants to Local Educational Agencies, Twenty-First Century Community Learning Centers, Supporting Effective Instruction State Grants, Education Stabilization Fund (ESF), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Temporary Assistance for Needy Families (TANF), Child Support Enforcement, Low-Income Home Energy Assistance Program, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures 10.557 ($168,740,425), 10.558 ($156,353,139), 16.575 ($78,196,419), 17.258/17.259/17.278 ($141,177,677), 20.205 ($1,932,300,419), 21.023 ($179,355,381), 21.026 ($177,107,928), 21.027 ($2,804,581,453), 84.010A ($704,235,726), 84.287 ($77,436,583),84.367A ($76,537,613), 84.425 ($2,227,152,891), 93.323 ($174,636,052), 93.558 ($578,867,422), 93.563 ($131,300,355), 93.568 ($288,503,657), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Finding 2023-002: Inadequate Monitoring of Subrecipient Single Audit Reviews Compliance Requirement: Subrecipient Monitoring Condition Found: The State of Illinois did not establish adequate controls to monitor the completion and documentation of the review single audit reports for its subrecipients of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Child and Adult Care Food Program (CACFP), Crime Victims Assistance Program (CVA), WIOA Cluster (WIOA), Highway and Planning Construction (Highway), Emergency Rental Assistance Program (ERAP), Homeowner Assistance Fund Program (HAF), Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Twenty-First Century Community Learning Centers (Twenty-First), Title I Grants to Local Education Agencies (Title I), Supporting Effective Instruction State Grants (SEISG), Education Stabilization Funds (ESF), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Temporary Assistance for Needy Families Cluster (TANF), Child Support Enforcement (CSE), Low-Income Home Energy Assistance Program (LIHEAP), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) in the State's Grant Accountability and Transparency Act (GATA) Audit Report Review Management System (ARRMS). The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of GATA on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. The State utilizes a contractor to perform the centralized functions of obtaining the single audit report, verifying the report meets the requirements, and assigning findings to the applicable State agency. During our testing of subrecipient single audit desk review files for our 2023 major programs, we noted instances where single audit desk reviews were still in process and had not been finalized within GATA ARRMS as of the date of our testing (October 7, 2024). One subrecipient in our sample for the WIC program had incomplete single audit reviews for fiscal years 2019 through 2022, despite the fact the State had obtained the single audit report from the Federal Audit Clearinghouse for each of these fiscal years. Upon further review of data contained within GATA ARRMS, we identified 669 single audit reviews were identified as incomplete in GATA ARRMS for grantees who: (1) reported expenditures under fiscal year 2023 major programs, (2) had an audit report with a FAC acceptance date between January 2, 2022 and January 3, 2023 (requiring the report to be reviewed during fiscal year 2023) and (3) were not sanctioned (placed on the Illinois Stop Payment List) by the State for noncompliance with reporting requirements. These 669 reviews were in varying stages of completion with the majority (608 audits) pending documentation supporting the issuance of a final completion letter by the cognizant agency. The remaining 61 audits (9.1%) were pending receipt of documentation, pending a review, or had another error requiring follow-up. These 669 audits included 323 audits (48.3%) with one or more findings potentially requiring a management decision to be issued. We noted the cognizant agencies for the 669 incomplete single audit reviews in GATA ARRMS were as follows: "See Table in the Audit Report". The 669 incomplete single audit reviews in GATA ARRMS pertained to subrecipients of the following major programs: "See Table in the Audit Report". While in many instances there was evidence the State agencies had completed the necessary procedures outside of GATA ARRMS, the purpose of GATA ARRMS is to reduce the duplication of effort across State agencies and to provide a single submission point for the State’s subrecipients. The lack of monitoring controls around this centralized process may result in noncompliance with subrecipient single audit desk review requirements. The State’s subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table in the Audit Report". Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(d)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures to monitor whether single audit reports are reviewed, management decision letters are issued, and single audit desk review files are closed out in GATA ARRMS in a timely manner. Cause: In discussing these conditions with GOMB officials, management stated that the incompleteness of the State’s audit reviews in GATA ARRMS was due to oversight. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in GATA ARRMS in a timely manner may result in noncompliance with the State’s obligation as a pass-through entity to appropriately monitor its subrecipients. Repeat Finding: A similar finding was not reported in the prior year audit (Finding Code 2023-002). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend GOMB establish procedures to monitor the completion and documentation of single audit report reviews in GATA ARRMS to ensure the State complies with its obligation as a pass-through entity. Views of GOMB Officials: GOMB agrees with the finding.
State Agency: Illinois Governor’s Office of Management and Budget (GOMB) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Justice (DOJ), U.S. Department of Labor (DOL), U.S. Department of Transportation (DOT), U.S. Department of the Treasury (TREAS), U.S. Department of Education (ED), U.S. Department of Health and Human Services (USDHHS) Program Name: Special Supplemental Nutrition Program for Women, Infants and Children (WIC), Child and Adult Care Food Program (CACFP), Crime Victims Assistance Program, WIOA Cluster, Highway Planning and Construction, Emergency Rental Assistance Program, Homeowner Assistance Fund Program, Coronavirus State and Local Fiscal Recovery Funds, Title I Grants to Local Educational Agencies, Twenty-First Century Community Learning Centers, Supporting Effective Instruction State Grants, Education Stabilization Fund (ESF), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Temporary Assistance for Needy Families (TANF), Child Support Enforcement, Low-Income Home Energy Assistance Program, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures 10.557 ($168,740,425), 10.558 ($156,353,139), 16.575 ($78,196,419), 17.258/17.259/17.278 ($141,177,677), 20.205 ($1,932,300,419), 21.023 ($179,355,381), 21.026 ($177,107,928), 21.027 ($2,804,581,453), 84.010A ($704,235,726), 84.287 ($77,436,583),84.367A ($76,537,613), 84.425 ($2,227,152,891), 93.323 ($174,636,052), 93.558 ($578,867,422), 93.563 ($131,300,355), 93.568 ($288,503,657), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Finding 2023-002: Inadequate Monitoring of Subrecipient Single Audit Reviews Compliance Requirement: Subrecipient Monitoring Condition Found: The State of Illinois did not establish adequate controls to monitor the completion and documentation of the review single audit reports for its subrecipients of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Child and Adult Care Food Program (CACFP), Crime Victims Assistance Program (CVA), WIOA Cluster (WIOA), Highway and Planning Construction (Highway), Emergency Rental Assistance Program (ERAP), Homeowner Assistance Fund Program (HAF), Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Twenty-First Century Community Learning Centers (Twenty-First), Title I Grants to Local Education Agencies (Title I), Supporting Effective Instruction State Grants (SEISG), Education Stabilization Funds (ESF), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Temporary Assistance for Needy Families Cluster (TANF), Child Support Enforcement (CSE), Low-Income Home Energy Assistance Program (LIHEAP), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) in the State's Grant Accountability and Transparency Act (GATA) Audit Report Review Management System (ARRMS). The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of GATA on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. The State utilizes a contractor to perform the centralized functions of obtaining the single audit report, verifying the report meets the requirements, and assigning findings to the applicable State agency. During our testing of subrecipient single audit desk review files for our 2023 major programs, we noted instances where single audit desk reviews were still in process and had not been finalized within GATA ARRMS as of the date of our testing (October 7, 2024). One subrecipient in our sample for the WIC program had incomplete single audit reviews for fiscal years 2019 through 2022, despite the fact the State had obtained the single audit report from the Federal Audit Clearinghouse for each of these fiscal years. Upon further review of data contained within GATA ARRMS, we identified 669 single audit reviews were identified as incomplete in GATA ARRMS for grantees who: (1) reported expenditures under fiscal year 2023 major programs, (2) had an audit report with a FAC acceptance date between January 2, 2022 and January 3, 2023 (requiring the report to be reviewed during fiscal year 2023) and (3) were not sanctioned (placed on the Illinois Stop Payment List) by the State for noncompliance with reporting requirements. These 669 reviews were in varying stages of completion with the majority (608 audits) pending documentation supporting the issuance of a final completion letter by the cognizant agency. The remaining 61 audits (9.1%) were pending receipt of documentation, pending a review, or had another error requiring follow-up. These 669 audits included 323 audits (48.3%) with one or more findings potentially requiring a management decision to be issued. We noted the cognizant agencies for the 669 incomplete single audit reviews in GATA ARRMS were as follows: "See Table in the Audit Report". The 669 incomplete single audit reviews in GATA ARRMS pertained to subrecipients of the following major programs: "See Table in the Audit Report". While in many instances there was evidence the State agencies had completed the necessary procedures outside of GATA ARRMS, the purpose of GATA ARRMS is to reduce the duplication of effort across State agencies and to provide a single submission point for the State’s subrecipients. The lack of monitoring controls around this centralized process may result in noncompliance with subrecipient single audit desk review requirements. The State’s subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table in the Audit Report". Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(d)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures to monitor whether single audit reports are reviewed, management decision letters are issued, and single audit desk review files are closed out in GATA ARRMS in a timely manner. Cause: In discussing these conditions with GOMB officials, management stated that the incompleteness of the State’s audit reviews in GATA ARRMS was due to oversight. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in GATA ARRMS in a timely manner may result in noncompliance with the State’s obligation as a pass-through entity to appropriately monitor its subrecipients. Repeat Finding: A similar finding was not reported in the prior year audit (Finding Code 2023-002). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend GOMB establish procedures to monitor the completion and documentation of single audit report reviews in GATA ARRMS to ensure the State complies with its obligation as a pass-through entity. Views of GOMB Officials: GOMB agrees with the finding.
State Agency: Illinois Governor’s Office of Management and Budget (GOMB) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Justice (DOJ), U.S. Department of Labor (DOL), U.S. Department of Transportation (DOT), U.S. Department of the Treasury (TREAS), U.S. Department of Education (ED), U.S. Department of Health and Human Services (USDHHS) Program Name: Special Supplemental Nutrition Program for Women, Infants and Children (WIC), Child and Adult Care Food Program (CACFP), Crime Victims Assistance Program, WIOA Cluster, Highway Planning and Construction, Emergency Rental Assistance Program, Homeowner Assistance Fund Program, Coronavirus State and Local Fiscal Recovery Funds, Title I Grants to Local Educational Agencies, Twenty-First Century Community Learning Centers, Supporting Effective Instruction State Grants, Education Stabilization Fund (ESF), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Temporary Assistance for Needy Families (TANF), Child Support Enforcement, Low-Income Home Energy Assistance Program, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures 10.557 ($168,740,425), 10.558 ($156,353,139), 16.575 ($78,196,419), 17.258/17.259/17.278 ($141,177,677), 20.205 ($1,932,300,419), 21.023 ($179,355,381), 21.026 ($177,107,928), 21.027 ($2,804,581,453), 84.010A ($704,235,726), 84.287 ($77,436,583),84.367A ($76,537,613), 84.425 ($2,227,152,891), 93.323 ($174,636,052), 93.558 ($578,867,422), 93.563 ($131,300,355), 93.568 ($288,503,657), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Finding 2023-002: Inadequate Monitoring of Subrecipient Single Audit Reviews Compliance Requirement: Subrecipient Monitoring Condition Found: The State of Illinois did not establish adequate controls to monitor the completion and documentation of the review single audit reports for its subrecipients of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Child and Adult Care Food Program (CACFP), Crime Victims Assistance Program (CVA), WIOA Cluster (WIOA), Highway and Planning Construction (Highway), Emergency Rental Assistance Program (ERAP), Homeowner Assistance Fund Program (HAF), Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Twenty-First Century Community Learning Centers (Twenty-First), Title I Grants to Local Education Agencies (Title I), Supporting Effective Instruction State Grants (SEISG), Education Stabilization Funds (ESF), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), Temporary Assistance for Needy Families Cluster (TANF), Child Support Enforcement (CSE), Low-Income Home Energy Assistance Program (LIHEAP), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) in the State's Grant Accountability and Transparency Act (GATA) Audit Report Review Management System (ARRMS). The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of GATA on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. The State utilizes a contractor to perform the centralized functions of obtaining the single audit report, verifying the report meets the requirements, and assigning findings to the applicable State agency. During our testing of subrecipient single audit desk review files for our 2023 major programs, we noted instances where single audit desk reviews were still in process and had not been finalized within GATA ARRMS as of the date of our testing (October 7, 2024). One subrecipient in our sample for the WIC program had incomplete single audit reviews for fiscal years 2019 through 2022, despite the fact the State had obtained the single audit report from the Federal Audit Clearinghouse for each of these fiscal years. Upon further review of data contained within GATA ARRMS, we identified 669 single audit reviews were identified as incomplete in GATA ARRMS for grantees who: (1) reported expenditures under fiscal year 2023 major programs, (2) had an audit report with a FAC acceptance date between January 2, 2022 and January 3, 2023 (requiring the report to be reviewed during fiscal year 2023) and (3) were not sanctioned (placed on the Illinois Stop Payment List) by the State for noncompliance with reporting requirements. These 669 reviews were in varying stages of completion with the majority (608 audits) pending documentation supporting the issuance of a final completion letter by the cognizant agency. The remaining 61 audits (9.1%) were pending receipt of documentation, pending a review, or had another error requiring follow-up. These 669 audits included 323 audits (48.3%) with one or more findings potentially requiring a management decision to be issued. We noted the cognizant agencies for the 669 incomplete single audit reviews in GATA ARRMS were as follows: "See Table in the Audit Report". The 669 incomplete single audit reviews in GATA ARRMS pertained to subrecipients of the following major programs: "See Table in the Audit Report". While in many instances there was evidence the State agencies had completed the necessary procedures outside of GATA ARRMS, the purpose of GATA ARRMS is to reduce the duplication of effort across State agencies and to provide a single submission point for the State’s subrecipients. The lack of monitoring controls around this centralized process may result in noncompliance with subrecipient single audit desk review requirements. The State’s subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table in the Audit Report". Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(d)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC) and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures to monitor whether single audit reports are reviewed, management decision letters are issued, and single audit desk review files are closed out in GATA ARRMS in a timely manner. Cause: In discussing these conditions with GOMB officials, management stated that the incompleteness of the State’s audit reviews in GATA ARRMS was due to oversight. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in GATA ARRMS in a timely manner may result in noncompliance with the State’s obligation as a pass-through entity to appropriately monitor its subrecipients. Repeat Finding: A similar finding was not reported in the prior year audit (Finding Code 2023-002). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend GOMB establish procedures to monitor the completion and documentation of single audit report reviews in GATA ARRMS to ensure the State complies with its obligation as a pass-through entity. Views of GOMB Officials: GOMB agrees with the finding.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS), Program Name: Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.557 ($168,740,425), 93.558 ($578,867,422), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-015: Inadequate Review of Subrecipient Single Audit Reports Condition Found: IDHS did not adequately review single audit reports received from its subrecipients for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Temporary Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs on a timely basis. The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of the State's Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. Subrecipients who are required to report their single audits to GATU must submit their audit report within 9 months of their fiscal year end. Subrecipients who fail to provide the required reporting package within that timeframe will be suspended unless a deadline waiver or extension is granted. IDHS staff are responsible for reviewing the reports assigned to them by GATU and determining whether: (1) federal funds reported in the schedule of expenditures of federal awards (SEFA) reconcile to IDHS records and (2) issuing management decisions on findings reported within required time frames. During our testing of a sample of single audit desk review files for 83 subrecipients of the WIC, TANF, CCDF, SSBG, and SAPT programs we noted the single audit desk reviews are still in process and have not been finalized within the GATA Audit Report Review Management System (ARRMS) as of the date of our test work for two subrecipients of the WIC and SSBG programs. Additionally, we noted one subrecipient of the WIC and SSBG programs, one subrecipient of the SSBG and SAPT programs, and five subrecipients of the SAPT program with June 30, 2022 fiscal year-ends that did not submit their reporting package to ARRMS within 9 months of their fiscal year end in accordance with GATU policies. GATU’s files did not contain evidence that waivers were granted, or sanctions were imposed on these subrecipients. Further, we noted IDHS has not established controls over subrecipient single audit report reviews at an adequate level of precision to ensure single audit reports are received and reviewed timely. IDHS’ subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table and Audit Reports". Criteria or Requirement: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the FAC and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures and hiring adequate resources to ensure single audit reports are reviewed in a timely manner and management decision letters are issued with required timeframes. Cause: In discussing these conditions with IDHS officials, management stated that since the COVID-19 pandemic, IDHS has attempted to maintain communications with non-compliant grantees that have had ongoing issues with accounting staff shortages and scheduling of their required audits. These issues have led to grantees not meeting required timelines for the submissions of their annually-required audits. Additionally, in some instances, IDHS has had issues identifying grantees in the statewide audit review portal, resulting in delays of processing audit reviews and due dates. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreements. Additionally, failure to issue management decisions within six months of acceptance of the single audit report by the FAC results in noncompliance with federal regulations. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-015). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to ensure: (1) subrecipient single audit reports are obtained and reviewed within established deadlines, (2) management decisions are issued for all findings affecting its federal programs in accordance with the Uniform Guidance, and (3) follow up procedures are performed to ensure subrecipients have taken timely and appropriate corrective action. Views of IDHS Officials: The Department accepts the recommendation. The Department will review existing policies and procedures and make revisions where possible to strengthen controls over the timeliness of receipt and review of subrecipient single audit reports, issuance of management decisions, and follow up procedures performed to ensure subrecipients have taken timely and appropriate corrective action for findings.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS), Program Name: Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.557 ($168,740,425), 93.558 ($578,867,422), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-015: Inadequate Review of Subrecipient Single Audit Reports Condition Found: IDHS did not adequately review single audit reports received from its subrecipients for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Temporary Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs on a timely basis. The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of the State's Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. Subrecipients who are required to report their single audits to GATU must submit their audit report within 9 months of their fiscal year end. Subrecipients who fail to provide the required reporting package within that timeframe will be suspended unless a deadline waiver or extension is granted. IDHS staff are responsible for reviewing the reports assigned to them by GATU and determining whether: (1) federal funds reported in the schedule of expenditures of federal awards (SEFA) reconcile to IDHS records and (2) issuing management decisions on findings reported within required time frames. During our testing of a sample of single audit desk review files for 83 subrecipients of the WIC, TANF, CCDF, SSBG, and SAPT programs we noted the single audit desk reviews are still in process and have not been finalized within the GATA Audit Report Review Management System (ARRMS) as of the date of our test work for two subrecipients of the WIC and SSBG programs. Additionally, we noted one subrecipient of the WIC and SSBG programs, one subrecipient of the SSBG and SAPT programs, and five subrecipients of the SAPT program with June 30, 2022 fiscal year-ends that did not submit their reporting package to ARRMS within 9 months of their fiscal year end in accordance with GATU policies. GATU’s files did not contain evidence that waivers were granted, or sanctions were imposed on these subrecipients. Further, we noted IDHS has not established controls over subrecipient single audit report reviews at an adequate level of precision to ensure single audit reports are received and reviewed timely. IDHS’ subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table and Audit Reports". Criteria or Requirement: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the FAC and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures and hiring adequate resources to ensure single audit reports are reviewed in a timely manner and management decision letters are issued with required timeframes. Cause: In discussing these conditions with IDHS officials, management stated that since the COVID-19 pandemic, IDHS has attempted to maintain communications with non-compliant grantees that have had ongoing issues with accounting staff shortages and scheduling of their required audits. These issues have led to grantees not meeting required timelines for the submissions of their annually-required audits. Additionally, in some instances, IDHS has had issues identifying grantees in the statewide audit review portal, resulting in delays of processing audit reviews and due dates. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreements. Additionally, failure to issue management decisions within six months of acceptance of the single audit report by the FAC results in noncompliance with federal regulations. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-015). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to ensure: (1) subrecipient single audit reports are obtained and reviewed within established deadlines, (2) management decisions are issued for all findings affecting its federal programs in accordance with the Uniform Guidance, and (3) follow up procedures are performed to ensure subrecipients have taken timely and appropriate corrective action. Views of IDHS Officials: The Department accepts the recommendation. The Department will review existing policies and procedures and make revisions where possible to strengthen controls over the timeliness of receipt and review of subrecipient single audit reports, issuance of management decisions, and follow up procedures performed to ensure subrecipients have taken timely and appropriate corrective action for findings.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS), Program Name: Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.557 ($168,740,425), 93.558 ($578,867,422), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-015: Inadequate Review of Subrecipient Single Audit Reports Condition Found: IDHS did not adequately review single audit reports received from its subrecipients for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Temporary Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs on a timely basis. The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of the State's Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. Subrecipients who are required to report their single audits to GATU must submit their audit report within 9 months of their fiscal year end. Subrecipients who fail to provide the required reporting package within that timeframe will be suspended unless a deadline waiver or extension is granted. IDHS staff are responsible for reviewing the reports assigned to them by GATU and determining whether: (1) federal funds reported in the schedule of expenditures of federal awards (SEFA) reconcile to IDHS records and (2) issuing management decisions on findings reported within required time frames. During our testing of a sample of single audit desk review files for 83 subrecipients of the WIC, TANF, CCDF, SSBG, and SAPT programs we noted the single audit desk reviews are still in process and have not been finalized within the GATA Audit Report Review Management System (ARRMS) as of the date of our test work for two subrecipients of the WIC and SSBG programs. Additionally, we noted one subrecipient of the WIC and SSBG programs, one subrecipient of the SSBG and SAPT programs, and five subrecipients of the SAPT program with June 30, 2022 fiscal year-ends that did not submit their reporting package to ARRMS within 9 months of their fiscal year end in accordance with GATU policies. GATU’s files did not contain evidence that waivers were granted, or sanctions were imposed on these subrecipients. Further, we noted IDHS has not established controls over subrecipient single audit report reviews at an adequate level of precision to ensure single audit reports are received and reviewed timely. IDHS’ subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table and Audit Reports". Criteria or Requirement: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the FAC and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures and hiring adequate resources to ensure single audit reports are reviewed in a timely manner and management decision letters are issued with required timeframes. Cause: In discussing these conditions with IDHS officials, management stated that since the COVID-19 pandemic, IDHS has attempted to maintain communications with non-compliant grantees that have had ongoing issues with accounting staff shortages and scheduling of their required audits. These issues have led to grantees not meeting required timelines for the submissions of their annually-required audits. Additionally, in some instances, IDHS has had issues identifying grantees in the statewide audit review portal, resulting in delays of processing audit reviews and due dates. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreements. Additionally, failure to issue management decisions within six months of acceptance of the single audit report by the FAC results in noncompliance with federal regulations. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-015). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to ensure: (1) subrecipient single audit reports are obtained and reviewed within established deadlines, (2) management decisions are issued for all findings affecting its federal programs in accordance with the Uniform Guidance, and (3) follow up procedures are performed to ensure subrecipients have taken timely and appropriate corrective action. Views of IDHS Officials: The Department accepts the recommendation. The Department will review existing policies and procedures and make revisions where possible to strengthen controls over the timeliness of receipt and review of subrecipient single audit reports, issuance of management decisions, and follow up procedures performed to ensure subrecipients have taken timely and appropriate corrective action for findings.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS), Program Name: Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.557 ($168,740,425), 93.558 ($578,867,422), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-015: Inadequate Review of Subrecipient Single Audit Reports Condition Found: IDHS did not adequately review single audit reports received from its subrecipients for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Temporary Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs on a timely basis. The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of the State's Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. Subrecipients who are required to report their single audits to GATU must submit their audit report within 9 months of their fiscal year end. Subrecipients who fail to provide the required reporting package within that timeframe will be suspended unless a deadline waiver or extension is granted. IDHS staff are responsible for reviewing the reports assigned to them by GATU and determining whether: (1) federal funds reported in the schedule of expenditures of federal awards (SEFA) reconcile to IDHS records and (2) issuing management decisions on findings reported within required time frames. During our testing of a sample of single audit desk review files for 83 subrecipients of the WIC, TANF, CCDF, SSBG, and SAPT programs we noted the single audit desk reviews are still in process and have not been finalized within the GATA Audit Report Review Management System (ARRMS) as of the date of our test work for two subrecipients of the WIC and SSBG programs. Additionally, we noted one subrecipient of the WIC and SSBG programs, one subrecipient of the SSBG and SAPT programs, and five subrecipients of the SAPT program with June 30, 2022 fiscal year-ends that did not submit their reporting package to ARRMS within 9 months of their fiscal year end in accordance with GATU policies. GATU’s files did not contain evidence that waivers were granted, or sanctions were imposed on these subrecipients. Further, we noted IDHS has not established controls over subrecipient single audit report reviews at an adequate level of precision to ensure single audit reports are received and reviewed timely. IDHS’ subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table and Audit Reports". Criteria or Requirement: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the FAC and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures and hiring adequate resources to ensure single audit reports are reviewed in a timely manner and management decision letters are issued with required timeframes. Cause: In discussing these conditions with IDHS officials, management stated that since the COVID-19 pandemic, IDHS has attempted to maintain communications with non-compliant grantees that have had ongoing issues with accounting staff shortages and scheduling of their required audits. These issues have led to grantees not meeting required timelines for the submissions of their annually-required audits. Additionally, in some instances, IDHS has had issues identifying grantees in the statewide audit review portal, resulting in delays of processing audit reviews and due dates. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreements. Additionally, failure to issue management decisions within six months of acceptance of the single audit report by the FAC results in noncompliance with federal regulations. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-015). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to ensure: (1) subrecipient single audit reports are obtained and reviewed within established deadlines, (2) management decisions are issued for all findings affecting its federal programs in accordance with the Uniform Guidance, and (3) follow up procedures are performed to ensure subrecipients have taken timely and appropriate corrective action. Views of IDHS Officials: The Department accepts the recommendation. The Department will review existing policies and procedures and make revisions where possible to strengthen controls over the timeliness of receipt and review of subrecipient single audit reports, issuance of management decisions, and follow up procedures performed to ensure subrecipients have taken timely and appropriate corrective action for findings.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS), Program Name: Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.557 ($168,740,425), 93.558 ($578,867,422), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-015: Inadequate Review of Subrecipient Single Audit Reports Condition Found: IDHS did not adequately review single audit reports received from its subrecipients for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Temporary Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs on a timely basis. The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of the State's Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. Subrecipients who are required to report their single audits to GATU must submit their audit report within 9 months of their fiscal year end. Subrecipients who fail to provide the required reporting package within that timeframe will be suspended unless a deadline waiver or extension is granted. IDHS staff are responsible for reviewing the reports assigned to them by GATU and determining whether: (1) federal funds reported in the schedule of expenditures of federal awards (SEFA) reconcile to IDHS records and (2) issuing management decisions on findings reported within required time frames. During our testing of a sample of single audit desk review files for 83 subrecipients of the WIC, TANF, CCDF, SSBG, and SAPT programs we noted the single audit desk reviews are still in process and have not been finalized within the GATA Audit Report Review Management System (ARRMS) as of the date of our test work for two subrecipients of the WIC and SSBG programs. Additionally, we noted one subrecipient of the WIC and SSBG programs, one subrecipient of the SSBG and SAPT programs, and five subrecipients of the SAPT program with June 30, 2022 fiscal year-ends that did not submit their reporting package to ARRMS within 9 months of their fiscal year end in accordance with GATU policies. GATU’s files did not contain evidence that waivers were granted, or sanctions were imposed on these subrecipients. Further, we noted IDHS has not established controls over subrecipient single audit report reviews at an adequate level of precision to ensure single audit reports are received and reviewed timely. IDHS’ subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table and Audit Reports". Criteria or Requirement: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the FAC and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures and hiring adequate resources to ensure single audit reports are reviewed in a timely manner and management decision letters are issued with required timeframes. Cause: In discussing these conditions with IDHS officials, management stated that since the COVID-19 pandemic, IDHS has attempted to maintain communications with non-compliant grantees that have had ongoing issues with accounting staff shortages and scheduling of their required audits. These issues have led to grantees not meeting required timelines for the submissions of their annually-required audits. Additionally, in some instances, IDHS has had issues identifying grantees in the statewide audit review portal, resulting in delays of processing audit reviews and due dates. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreements. Additionally, failure to issue management decisions within six months of acceptance of the single audit report by the FAC results in noncompliance with federal regulations. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-015). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to ensure: (1) subrecipient single audit reports are obtained and reviewed within established deadlines, (2) management decisions are issued for all findings affecting its federal programs in accordance with the Uniform Guidance, and (3) follow up procedures are performed to ensure subrecipients have taken timely and appropriate corrective action. Views of IDHS Officials: The Department accepts the recommendation. The Department will review existing policies and procedures and make revisions where possible to strengthen controls over the timeliness of receipt and review of subrecipient single audit reports, issuance of management decisions, and follow up procedures performed to ensure subrecipients have taken timely and appropriate corrective action for findings.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS), Program Name: Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.557 ($168,740,425), 93.558 ($578,867,422), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-015: Inadequate Review of Subrecipient Single Audit Reports Condition Found: IDHS did not adequately review single audit reports received from its subrecipients for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Temporary Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs on a timely basis. The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of the State's Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. Subrecipients who are required to report their single audits to GATU must submit their audit report within 9 months of their fiscal year end. Subrecipients who fail to provide the required reporting package within that timeframe will be suspended unless a deadline waiver or extension is granted. IDHS staff are responsible for reviewing the reports assigned to them by GATU and determining whether: (1) federal funds reported in the schedule of expenditures of federal awards (SEFA) reconcile to IDHS records and (2) issuing management decisions on findings reported within required time frames. During our testing of a sample of single audit desk review files for 83 subrecipients of the WIC, TANF, CCDF, SSBG, and SAPT programs we noted the single audit desk reviews are still in process and have not been finalized within the GATA Audit Report Review Management System (ARRMS) as of the date of our test work for two subrecipients of the WIC and SSBG programs. Additionally, we noted one subrecipient of the WIC and SSBG programs, one subrecipient of the SSBG and SAPT programs, and five subrecipients of the SAPT program with June 30, 2022 fiscal year-ends that did not submit their reporting package to ARRMS within 9 months of their fiscal year end in accordance with GATU policies. GATU’s files did not contain evidence that waivers were granted, or sanctions were imposed on these subrecipients. Further, we noted IDHS has not established controls over subrecipient single audit report reviews at an adequate level of precision to ensure single audit reports are received and reviewed timely. IDHS’ subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table and Audit Reports". Criteria or Requirement: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the FAC and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures and hiring adequate resources to ensure single audit reports are reviewed in a timely manner and management decision letters are issued with required timeframes. Cause: In discussing these conditions with IDHS officials, management stated that since the COVID-19 pandemic, IDHS has attempted to maintain communications with non-compliant grantees that have had ongoing issues with accounting staff shortages and scheduling of their required audits. These issues have led to grantees not meeting required timelines for the submissions of their annually-required audits. Additionally, in some instances, IDHS has had issues identifying grantees in the statewide audit review portal, resulting in delays of processing audit reviews and due dates. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreements. Additionally, failure to issue management decisions within six months of acceptance of the single audit report by the FAC results in noncompliance with federal regulations. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-015). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to ensure: (1) subrecipient single audit reports are obtained and reviewed within established deadlines, (2) management decisions are issued for all findings affecting its federal programs in accordance with the Uniform Guidance, and (3) follow up procedures are performed to ensure subrecipients have taken timely and appropriate corrective action. Views of IDHS Officials: The Department accepts the recommendation. The Department will review existing policies and procedures and make revisions where possible to strengthen controls over the timeliness of receipt and review of subrecipient single audit reports, issuance of management decisions, and follow up procedures performed to ensure subrecipients have taken timely and appropriate corrective action for findings.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS), Program Name: Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.557 ($168,740,425), 93.558 ($578,867,422), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-015: Inadequate Review of Subrecipient Single Audit Reports Condition Found: IDHS did not adequately review single audit reports received from its subrecipients for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Temporary Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs on a timely basis. The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of the State's Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. Subrecipients who are required to report their single audits to GATU must submit their audit report within 9 months of their fiscal year end. Subrecipients who fail to provide the required reporting package within that timeframe will be suspended unless a deadline waiver or extension is granted. IDHS staff are responsible for reviewing the reports assigned to them by GATU and determining whether: (1) federal funds reported in the schedule of expenditures of federal awards (SEFA) reconcile to IDHS records and (2) issuing management decisions on findings reported within required time frames. During our testing of a sample of single audit desk review files for 83 subrecipients of the WIC, TANF, CCDF, SSBG, and SAPT programs we noted the single audit desk reviews are still in process and have not been finalized within the GATA Audit Report Review Management System (ARRMS) as of the date of our test work for two subrecipients of the WIC and SSBG programs. Additionally, we noted one subrecipient of the WIC and SSBG programs, one subrecipient of the SSBG and SAPT programs, and five subrecipients of the SAPT program with June 30, 2022 fiscal year-ends that did not submit their reporting package to ARRMS within 9 months of their fiscal year end in accordance with GATU policies. GATU’s files did not contain evidence that waivers were granted, or sanctions were imposed on these subrecipients. Further, we noted IDHS has not established controls over subrecipient single audit report reviews at an adequate level of precision to ensure single audit reports are received and reviewed timely. IDHS’ subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table and Audit Reports". Criteria or Requirement: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the FAC and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures and hiring adequate resources to ensure single audit reports are reviewed in a timely manner and management decision letters are issued with required timeframes. Cause: In discussing these conditions with IDHS officials, management stated that since the COVID-19 pandemic, IDHS has attempted to maintain communications with non-compliant grantees that have had ongoing issues with accounting staff shortages and scheduling of their required audits. These issues have led to grantees not meeting required timelines for the submissions of their annually-required audits. Additionally, in some instances, IDHS has had issues identifying grantees in the statewide audit review portal, resulting in delays of processing audit reviews and due dates. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreements. Additionally, failure to issue management decisions within six months of acceptance of the single audit report by the FAC results in noncompliance with federal regulations. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-015). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to ensure: (1) subrecipient single audit reports are obtained and reviewed within established deadlines, (2) management decisions are issued for all findings affecting its federal programs in accordance with the Uniform Guidance, and (3) follow up procedures are performed to ensure subrecipients have taken timely and appropriate corrective action. Views of IDHS Officials: The Department accepts the recommendation. The Department will review existing policies and procedures and make revisions where possible to strengthen controls over the timeliness of receipt and review of subrecipient single audit reports, issuance of management decisions, and follow up procedures performed to ensure subrecipients have taken timely and appropriate corrective action for findings.
State Agency: Illinois Department of Human Services (IDHS) Federal Agency: U.S. Department of Agriculture (USDA), U.S. Department of Health and Human Services (USDHHS), Program Name: Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families, Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant, Block Grants for Prevention and Treatment of Substance Abuse ALN and Program Expenditures: 10.557 ($168,740,425), 93.558 ($578,867,422), 93.575/93.596 ($783,907,069), 93.667 ($57,147,970), 93.959 ($101,011,200) Award Numbers: Various – see table of award numbers Federal Award Year: Various – see table of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-015: Inadequate Review of Subrecipient Single Audit Reports Condition Found: IDHS did not adequately review single audit reports received from its subrecipients for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Temporary Assistance for Needy Families (TANF), Child Care and Development Fund (CCDF) Cluster, Social Services Block Grant (SSBG), and Block Grants for Prevention and Treatment of Substance Abuse (SAPT) programs on a timely basis. The State of Illinois established the Grant Accountability Transparency Unit (GATU) to implement the provisions of the State's Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State and working with program personnel to issue management decisions on findings. Subrecipients who are required to report their single audits to GATU must submit their audit report within 9 months of their fiscal year end. Subrecipients who fail to provide the required reporting package within that timeframe will be suspended unless a deadline waiver or extension is granted. IDHS staff are responsible for reviewing the reports assigned to them by GATU and determining whether: (1) federal funds reported in the schedule of expenditures of federal awards (SEFA) reconcile to IDHS records and (2) issuing management decisions on findings reported within required time frames. During our testing of a sample of single audit desk review files for 83 subrecipients of the WIC, TANF, CCDF, SSBG, and SAPT programs we noted the single audit desk reviews are still in process and have not been finalized within the GATA Audit Report Review Management System (ARRMS) as of the date of our test work for two subrecipients of the WIC and SSBG programs. Additionally, we noted one subrecipient of the WIC and SSBG programs, one subrecipient of the SSBG and SAPT programs, and five subrecipients of the SAPT program with June 30, 2022 fiscal year-ends that did not submit their reporting package to ARRMS within 9 months of their fiscal year end in accordance with GATU policies. GATU’s files did not contain evidence that waivers were granted, or sanctions were imposed on these subrecipients. Further, we noted IDHS has not established controls over subrecipient single audit report reviews at an adequate level of precision to ensure single audit reports are received and reviewed timely. IDHS’ subrecipient expenditures under the federal programs for the year ended June 30, 2023 were as follows: "See Table and Audit Reports". Criteria or Requirement: According to 2 CFR 200.332(e), a pass-through entity is required to monitor the activities of subrecipients as necessary to ensure the federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. Further, 2 CFR 200.332(e)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on audit findings within six months of acceptance of the audit report by the FAC and ensure that the subrecipient takes timely and appropriate corrective action on all audit findings. In addition, 2 CFR 200.303 requires nonfederal entities to, among other things, establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effective internal controls should include implementing procedures and hiring adequate resources to ensure single audit reports are reviewed in a timely manner and management decision letters are issued with required timeframes. Cause: In discussing these conditions with IDHS officials, management stated that since the COVID-19 pandemic, IDHS has attempted to maintain communications with non-compliant grantees that have had ongoing issues with accounting staff shortages and scheduling of their required audits. These issues have led to grantees not meeting required timelines for the submissions of their annually-required audits. Additionally, in some instances, IDHS has had issues identifying grantees in the statewide audit review portal, resulting in delays of processing audit reviews and due dates. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreements. Additionally, failure to issue management decisions within six months of acceptance of the single audit report by the FAC results in noncompliance with federal regulations. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-015). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend IDHS establish procedures to ensure: (1) subrecipient single audit reports are obtained and reviewed within established deadlines, (2) management decisions are issued for all findings affecting its federal programs in accordance with the Uniform Guidance, and (3) follow up procedures are performed to ensure subrecipients have taken timely and appropriate corrective action. Views of IDHS Officials: The Department accepts the recommendation. The Department will review existing policies and procedures and make revisions where possible to strengthen controls over the timeliness of receipt and review of subrecipient single audit reports, issuance of management decisions, and follow up procedures performed to ensure subrecipients have taken timely and appropriate corrective action for findings.
State Agency: Illinois Criminal Justice Information Authority (ICJIA) Federal Agency: U.S. Department of Justice (USDOJ) Program Name: Crime Victim Assistance ALN and Program Expenditures: 16.575 ($78,196,419) Award Numbers: Various – see schedule of award numbers Federal Award Year: Various – see schedule of award numbers Questioned Costs: None Compliance Requirement: Subrecipient Monitoring Finding 2023-034: Inadequate Review of Subrecipient Single Audit Reports Condition Found: ICJIA did not adequately review single audit reports received from its subrecipients for the Crime Victim Assistance Program (CVA) program on a timely basis. The State of Illinois established the Grant Accountability and Transparency Unit (GATU) to implement the provisions of the State’s Grant Accountability and Transparency Act (GATA) on a centralized basis. GATU has established standardized reporting requirements for subrecipients of the various Federal and State programs administered by the State through its various departments. Subrecipients of the State are required to certify whether they expended more than $750,000 in federal awards during the fiscal year and submit their single audit reporting packages to the Federal Audit Clearinghouse (if required). GATU is then responsible for obtaining the single audit reporting package, verifying the report meets the single audit requirements, and assigning, to the applicable state agency, any findings attributable to amounts passed through to the subrecipient(s) by the State. As a State agency, ICJIA is responsible for reviewing the reports assigned to them by GATU and determining whether Federal funds reported in the consolidated year-end financial report (CYEFR) reconcile to ICJIA records. Additionally, as the cognizant State agency, ICJIA is responsible for issuing management decisions on findings reported and applying sanctions to subrecipients who do not comply with reporting requirements (i.e. stop pay process). During our testing of a sample of single audit desk review files for 16 subrecipients (with expenditures of $52,565,919 in the fiscal year), we noted the following: • For one subrecipient (with expenditures of $471,739), ICJIA did not issue a Management Decision Letter (MDL) in a timely manner. The delay in issuing this management decision letter was 67 days beyond the required timeframe. • For six subrecipients (with expenditures of $28,012,353), ICJIA did not review the single audit reports and did not issue a MDL as required. • For 10 subrecipients (with expenditures of $27,690,600), ICJIA did not reconcile the CYEFR to ICJIA’s records as required. • For two subrecipients (with expenditures of $1,155,919), ICJIA did not receive the single audit reporting package within required timeframes or follow up with the subrecipient. Additionally, ICJIA did not invoke the stop pay process. ICJIA has not established controls over subrecipient single audit reviews at an adequate level of precision to ensure single audit reporting requirements, including obtaining and reviewing single audit reporting packages, issuing management decision letters, reconciling CYEFRs to agency records, and invoking stop payment actions are performed within required timeframes. ICJIA passed through approximately $75,301,704 to subrecipients of the CVA program during the year ended June 30, 2023. Criteria or Requirement: According to 2 CFR 200.332(d), a pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statues, regulations and the terms and conditions of the subaward, and that the subaward performance goals are achieved. Additionally, 2 CFR 200.332(d)(3) and 2 CFR 200.521 state that a pass-through entity is required to issue a management decision on federal awards audit findings within six months of the acceptance of the report by the Federal Audit Clearinghouse and ensure the subrecipient takes timely and appropriate corrective action on all audit findings. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to established and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure Single Audit reports are reviewed in a timely manner and management decisions are issued within required timeframes. Cause: In discussing these conditions with ICJIA officials, they stated this GATA responsibility has not been performed as consistently as other responsibilities due to competing priorities and staff shortages. Possible Asserted Effect: Failure to complete and document reviews of subrecipient single audit reports in a timely manner may result in federal funds being expended for unallowable purposes and subrecipients not administering the federal programs in accordance with laws, regulations, and the grant agreement. Repeat Finding: A similar finding was not reported in the prior year audit. (Finding Code 2023-034) Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend ICJIA establish procedures to ensure subrecipient single audit report reviews are completed and documented in a timely manner. Additionally, ICJIA should implement procedures to ensure timely reconciliation of funds, issuance of management decisions letters, and initiation of the stop pay process. Views of ICJIA Officials: ICJIA agrees with the recommendation. ICJIA does not have staff dedicated to this function. We are actively in the hiring process for a person who will be dedicated to this work. We believe once this person is hired, the Authority will be able to meet the GATA requirements.
FINDING NO: 2023-013 (Repeat 2022-017, 2021-024) STATE AGENCY: Oklahoma Department of Transportation FEDERAL AGENCY: Federal Transit Authority ALN: 20.509 FEDERAL PROGRAM NAME: Formula Grants for Rural Areas FEDERAL AWARD NUMBER: OK-2017-023-05, OK-2018-023-03, OK-2019-025-03, OK-2020-021-02, OK- 2021-018-00, OK-2022-016-00, OK-2022-025-00, OK-2022-027-00, OK-2023-026-00 FEDERAL AWARD YEAR: 2017, 2018, 2019, 2020, 2021, 2022, 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR 1201.1 states, “Except as otherwise provided in this part, the Department of Transportation adopts the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200). This part supersedes and repeals the requirements of the Department of Transportation Common Rules (49 CFR part 18 - Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments and 49 CFR part 19 - Uniform Administrative Requirements - Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non-Profit Organizations), except that grants and cooperative agreements executed prior to December 26, 2014 shall continue to be subject to 49 CFR parts 18 and 19 as in effect on the date of such grants or agreements. New parts with terminology specific to the Department of Transportation follow.” 2 CFR 200.332 states in part, “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.” 2 CFR 200.332 states in part, “All pass-through entities 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. (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. ...” 2 CFR 200.332 states in part, “All pass-through entities must: … (g) Verify that a subrecipient is audited as required by subpart F of this part.” 2 CFR 200.332 states in part, “All pass-through entities must: … (i) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 and in program regulations.” 2 CFR 200.521 states in part, “(a) General. The management decision must 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. If the auditee has not completed corrective action, a timetable for follow- up should be given. … While not required, the Federal agency or pass-through entity may also issue a management decision on findings relating to the financial statements, which are required to be reported in accordance with GAGAS.” 2 CFR 200.521 states in part, “(d) Time requirements. The Federal agency or pass-through entity responsible for issuing a management decision must do so within six months of the FAC's acceptance of the audit report. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report.” Condition and Context: The Office of Mobility and Public Transit (OMPT) at the Oklahoma Department of Transportation (Department) is responsible for monitoring of subrecipients. Project managers at OMPT monitor specific subrecipients assigned to them. As part of this process, the project managers obtain subrecipients’ audit reports and forward them to the Department’s Cabinet-Wide Audit Office (CWO) for review. OMPT relies on responses received from CWO subsequent to review for identification of findings to monitor and assess the risk related to subrecipients’ compliance with Federal statutes, regulations, and the terms and conditions of the subaward. OMPT uses an audit tracking spreadsheet as a control to ensure the requirements described in 2 CFR 200.332 are met. OMPT’s program managers are required to update the audit tracking spreadsheet for those subrecipients assigned to them. Based on our review of the tracking spreadsheet and supporting documentation, we determined that the control process was designed but not properly implemented. Based on inquiry and review of documentation related to financial and performance audits applicable to 23 subrecipients, we noted: • For 10 (43.48%) of 23 subrecipients, the OMPT did not obtain an audit report. • For 11 (47.83%) of 23 subrecipients, the OMPT was unable to provide documentation to support that a review of the subrecipients’ financial or performance audit was performed by CWO. • The OMPT did not take timely and appropriate action on deficiencies detected through audits and did not issue a management decision on audit findings within six months of acceptance of the audit report by the Federal Audit Clearinghouse. • The Department does not have an adequate process in place to determine whether subrecipients expended $750,000 or more in Federal awards for the year and are, therefore, subject to a single audit. • The OMPT does not have an established process to evaluate the risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subawards. Cause: Internal controls have not been designed and implemented to ensure compliance with all subrecipient monitoring requirements. The Department does not have a process in place to determine the type of audit required for each subrecipient. Each program manager is responsible for updating the information for their assigned subrecipients; however there is no oversight or mechanism in place to ensure that all subrecipients’ are accurately tracked. Effect: The Department is not in compliance with the requirements of 2 CFR 200.332. Because the OMPT is not performing adequate risk assessments, monitoring of subrecipients is not designed to account for the level of noncompliance risk the subrecipient poses. If audits are not adequately tracked, the Department cannot meet the imposed deadlines for follow-up. In addition, because information regarding Federal expenditures is not sought, subrecipients may not obtain a required Single Audit. Lastly, because documentation supporting the review of subrecipients’ audit reports was not maintained by CWO, we were unable to determine that a review of these audits took place. Recommendation: We recommend that the OMPT develop and implement procedures to ensure subrecipient risk assessments are performed annually and then incorporate the assessed risk in the design of its monitoring activities. We recommend the OMPT inquire after the subrecipients’ year-end as to the total Federal expenditures during the preceding fiscal year and update the Single Audit Tracking Sheet with the type of audit required. Further, we recommend the Single Audit Tracking Sheet be updated monthly to ensure all review/follow-up deadlines are met. Lastly, we recommend CWO implement a process to ensure that the review of subrecipients’ audit reports is adequately documented, and results are communicated to OMPT in a timely manner. Views of Responsible Official(s) Contact Person: OMPT - Eric Rose/Bobby Parkinson & Anne Antonelli, Internal Audit – Holly Lowe Anticipated Completion Date: 7/1/2025 Corrective Action Planned: The Oklahoma Department of Transportation agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-013 (Repeat 2022-017, 2021-024) STATE AGENCY: Oklahoma Department of Transportation FEDERAL AGENCY: Federal Transit Authority ALN: 20.509 FEDERAL PROGRAM NAME: Formula Grants for Rural Areas FEDERAL AWARD NUMBER: OK-2017-023-05, OK-2018-023-03, OK-2019-025-03, OK-2020-021-02, OK- 2021-018-00, OK-2022-016-00, OK-2022-025-00, OK-2022-027-00, OK-2023-026-00 FEDERAL AWARD YEAR: 2017, 2018, 2019, 2020, 2021, 2022, 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR 1201.1 states, “Except as otherwise provided in this part, the Department of Transportation adopts the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200). This part supersedes and repeals the requirements of the Department of Transportation Common Rules (49 CFR part 18 - Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments and 49 CFR part 19 - Uniform Administrative Requirements - Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non-Profit Organizations), except that grants and cooperative agreements executed prior to December 26, 2014 shall continue to be subject to 49 CFR parts 18 and 19 as in effect on the date of such grants or agreements. New parts with terminology specific to the Department of Transportation follow.” 2 CFR 200.332 states in part, “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.” 2 CFR 200.332 states in part, “All pass-through entities 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. (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. ...” 2 CFR 200.332 states in part, “All pass-through entities must: … (g) Verify that a subrecipient is audited as required by subpart F of this part.” 2 CFR 200.332 states in part, “All pass-through entities must: … (i) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 and in program regulations.” 2 CFR 200.521 states in part, “(a) General. The management decision must 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. If the auditee has not completed corrective action, a timetable for follow- up should be given. … While not required, the Federal agency or pass-through entity may also issue a management decision on findings relating to the financial statements, which are required to be reported in accordance with GAGAS.” 2 CFR 200.521 states in part, “(d) Time requirements. The Federal agency or pass-through entity responsible for issuing a management decision must do so within six months of the FAC's acceptance of the audit report. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report.” Condition and Context: The Office of Mobility and Public Transit (OMPT) at the Oklahoma Department of Transportation (Department) is responsible for monitoring of subrecipients. Project managers at OMPT monitor specific subrecipients assigned to them. As part of this process, the project managers obtain subrecipients’ audit reports and forward them to the Department’s Cabinet-Wide Audit Office (CWO) for review. OMPT relies on responses received from CWO subsequent to review for identification of findings to monitor and assess the risk related to subrecipients’ compliance with Federal statutes, regulations, and the terms and conditions of the subaward. OMPT uses an audit tracking spreadsheet as a control to ensure the requirements described in 2 CFR 200.332 are met. OMPT’s program managers are required to update the audit tracking spreadsheet for those subrecipients assigned to them. Based on our review of the tracking spreadsheet and supporting documentation, we determined that the control process was designed but not properly implemented. Based on inquiry and review of documentation related to financial and performance audits applicable to 23 subrecipients, we noted: • For 10 (43.48%) of 23 subrecipients, the OMPT did not obtain an audit report. • For 11 (47.83%) of 23 subrecipients, the OMPT was unable to provide documentation to support that a review of the subrecipients’ financial or performance audit was performed by CWO. • The OMPT did not take timely and appropriate action on deficiencies detected through audits and did not issue a management decision on audit findings within six months of acceptance of the audit report by the Federal Audit Clearinghouse. • The Department does not have an adequate process in place to determine whether subrecipients expended $750,000 or more in Federal awards for the year and are, therefore, subject to a single audit. • The OMPT does not have an established process to evaluate the risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subawards. Cause: Internal controls have not been designed and implemented to ensure compliance with all subrecipient monitoring requirements. The Department does not have a process in place to determine the type of audit required for each subrecipient. Each program manager is responsible for updating the information for their assigned subrecipients; however there is no oversight or mechanism in place to ensure that all subrecipients’ are accurately tracked. Effect: The Department is not in compliance with the requirements of 2 CFR 200.332. Because the OMPT is not performing adequate risk assessments, monitoring of subrecipients is not designed to account for the level of noncompliance risk the subrecipient poses. If audits are not adequately tracked, the Department cannot meet the imposed deadlines for follow-up. In addition, because information regarding Federal expenditures is not sought, subrecipients may not obtain a required Single Audit. Lastly, because documentation supporting the review of subrecipients’ audit reports was not maintained by CWO, we were unable to determine that a review of these audits took place. Recommendation: We recommend that the OMPT develop and implement procedures to ensure subrecipient risk assessments are performed annually and then incorporate the assessed risk in the design of its monitoring activities. We recommend the OMPT inquire after the subrecipients’ year-end as to the total Federal expenditures during the preceding fiscal year and update the Single Audit Tracking Sheet with the type of audit required. Further, we recommend the Single Audit Tracking Sheet be updated monthly to ensure all review/follow-up deadlines are met. Lastly, we recommend CWO implement a process to ensure that the review of subrecipients’ audit reports is adequately documented, and results are communicated to OMPT in a timely manner. Views of Responsible Official(s) Contact Person: OMPT - Eric Rose/Bobby Parkinson & Anne Antonelli, Internal Audit – Holly Lowe Anticipated Completion Date: 7/1/2025 Corrective Action Planned: The Oklahoma Department of Transportation agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-096 (Repeat finding 2022-071) STATE AGENCY: State of Oklahoma FEDERAL AGENCY: US Department of the Treasury ALN: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund (CRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $248,779 Criteria: 2 CFR § 200.303 - Internal controls 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.” 2 CFR § 200.332 - Requirements for pass-through entities states in part, “All pass-through entities must: … (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient's name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). (2) All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see § 200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency; … (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). (d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. … .” The Department of the Treasury Federal Register, Vol. 86, No. 10 from January 15, 2021 states in part, “The CARES [Coronavirus Aid, Relief, & Economic Security Act] Act provides that payments from the Fund may only be used to cover costs that— 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021. … This guidance applies in a like manner to costs of subrecipients. Thus, a grant or loan, for example, provided by a recipient using payments from the Fund must be used by the subrecipient only to purchase (or reimburse a purchase of) goods or services for which receipt both is needed within the covered period and occurs within the covered period. The direct recipient of payments from the Fund is ultimately responsible for compliance with this limitation on use of payments from the Fund. Condition and Context: Per the GAAP Package Z - Schedule of Expenditures of Federal Awards (SEFA), the State of Oklahoma reported $249,660.69 in CRF cash basis expenditures reimbursed to subrecipients by the CARES FORWARD1 team. We tested all five (5) reimbursement transactions for one subrecipient and noted the following: • One (20%) of the five (5) transactions totaling $4,594.40 contained no supporting documentation. • Four (80%) of the five (5) transactions totaling $245,066.29 contained costs totaling $244,184.29 that were incurred by the subrecipient after 12/31/2021 (covered period). The State of Oklahoma – CARES FORWARD team failed to perform an adequate review to ensure the subrecipient purchased (or reimbursed a purchase of) goods or services for which receipt both is needed within the covered period and occurs within the covered period. Further, we noted Award documents provided to the subrecipient did not include the terms and conditions of the subaward. Also, the CARES FORWARD team did not perform a risk assessment on subrecipients receiving continued funding during SFY 2023. Lastly, while performing Single Audit monitoring testwork on three (3) subrecipients for SFY 2022, we determined that the State of Oklahoma - CARES FORWARD team did not perform tracking on two (2) of the subrecipients that received CRF funds. For the two subrecipients, there is no documentation to show that OMES received the SFY 2022 Single Audit, evaluated whether the subrecipient took corrective action on all significant developments that affect the subaward, and issued a management decision for any audit findings pertaining to the federal award. Cause: Adequate controls were not in place to ensure the monitoring process utilized by the CARES FORWARD team considered the Department of Treasury guidance when determining whether the financial activities of the subrecipients complied with Federal statutes, regulations, and the terms and conditions of the Federal award prior to payment. Also, the State of Oklahoma – CARES FORWARD2 team did not have sufficient internal controls in place to ensure subrecipient award documentation included the terms and conditions of the subaward in accordance with 2 CFR § 200.332. Further, the State of Oklahoma – CARES FORWARD team did not have sufficient internal controls in place to ensure subrecipients are assessed for risk in accordance with 2 CFR § 200.332. Lastly, the State of Oklahoma – CARES Forward team did not have sufficient internal controls in place to ensure subrecipients are monitored for a Single Audit in accordance with 2 CFR § 200.332. Effect: These deficiencies resulted in questioned costs of $248,779 goods or services for which receipt both was needed and occurred within the covered period. The $248,779 in questioned costs related to subrecipient expenses is included in Finding 2023-108 (Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance) as well, as the same transactions failed to meet requirements under all these compliance areas. The amount should not be considered cumulative. The State of Oklahoma – CARES FORWARD team did not comply with 2 CFR § 200.332. Recommendation: We recommend for future grants that the State of Oklahoma strengthen their control process related to subrecipients to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: September 2022 Corrective Action Planned: The State of Oklahoma/Office of Management and Enterprise Services partially agrees with this finding. See corrective action plan located in the corrective action plan section of the report. Auditor Response: The State Auditor & Inspector’s Office questioned $248,779 to one subrecipient for SFY 2023 based on the expenditures for goods or services both needing to be within the covered period and occurring within the covered period. Therefore, since the subrecipient payments were after the covered period (December 31, 2021), the finding will stand. Further, since there was not a risk assessment performed during the year and the Single Audit tracking was not performed for SFY 2022 for 2 of the 3 subrecipients, the finding will stand.
FINDING NO: 2023-096 (Repeat finding 2022-071) STATE AGENCY: State of Oklahoma FEDERAL AGENCY: US Department of the Treasury ALN: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund (CRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $248,779 Criteria: 2 CFR § 200.303 - Internal controls 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.” 2 CFR § 200.332 - Requirements for pass-through entities states in part, “All pass-through entities must: … (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient's name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). (2) All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see § 200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency; … (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). (d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. … .” The Department of the Treasury Federal Register, Vol. 86, No. 10 from January 15, 2021 states in part, “The CARES [Coronavirus Aid, Relief, & Economic Security Act] Act provides that payments from the Fund may only be used to cover costs that— 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021. … This guidance applies in a like manner to costs of subrecipients. Thus, a grant or loan, for example, provided by a recipient using payments from the Fund must be used by the subrecipient only to purchase (or reimburse a purchase of) goods or services for which receipt both is needed within the covered period and occurs within the covered period. The direct recipient of payments from the Fund is ultimately responsible for compliance with this limitation on use of payments from the Fund. Condition and Context: Per the GAAP Package Z - Schedule of Expenditures of Federal Awards (SEFA), the State of Oklahoma reported $249,660.69 in CRF cash basis expenditures reimbursed to subrecipients by the CARES FORWARD1 team. We tested all five (5) reimbursement transactions for one subrecipient and noted the following: • One (20%) of the five (5) transactions totaling $4,594.40 contained no supporting documentation. • Four (80%) of the five (5) transactions totaling $245,066.29 contained costs totaling $244,184.29 that were incurred by the subrecipient after 12/31/2021 (covered period). The State of Oklahoma – CARES FORWARD team failed to perform an adequate review to ensure the subrecipient purchased (or reimbursed a purchase of) goods or services for which receipt both is needed within the covered period and occurs within the covered period. Further, we noted Award documents provided to the subrecipient did not include the terms and conditions of the subaward. Also, the CARES FORWARD team did not perform a risk assessment on subrecipients receiving continued funding during SFY 2023. Lastly, while performing Single Audit monitoring testwork on three (3) subrecipients for SFY 2022, we determined that the State of Oklahoma - CARES FORWARD team did not perform tracking on two (2) of the subrecipients that received CRF funds. For the two subrecipients, there is no documentation to show that OMES received the SFY 2022 Single Audit, evaluated whether the subrecipient took corrective action on all significant developments that affect the subaward, and issued a management decision for any audit findings pertaining to the federal award. Cause: Adequate controls were not in place to ensure the monitoring process utilized by the CARES FORWARD team considered the Department of Treasury guidance when determining whether the financial activities of the subrecipients complied with Federal statutes, regulations, and the terms and conditions of the Federal award prior to payment. Also, the State of Oklahoma – CARES FORWARD2 team did not have sufficient internal controls in place to ensure subrecipient award documentation included the terms and conditions of the subaward in accordance with 2 CFR § 200.332. Further, the State of Oklahoma – CARES FORWARD team did not have sufficient internal controls in place to ensure subrecipients are assessed for risk in accordance with 2 CFR § 200.332. Lastly, the State of Oklahoma – CARES Forward team did not have sufficient internal controls in place to ensure subrecipients are monitored for a Single Audit in accordance with 2 CFR § 200.332. Effect: These deficiencies resulted in questioned costs of $248,779 goods or services for which receipt both was needed and occurred within the covered period. The $248,779 in questioned costs related to subrecipient expenses is included in Finding 2023-108 (Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance) as well, as the same transactions failed to meet requirements under all these compliance areas. The amount should not be considered cumulative. The State of Oklahoma – CARES FORWARD team did not comply with 2 CFR § 200.332. Recommendation: We recommend for future grants that the State of Oklahoma strengthen their control process related to subrecipients to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: September 2022 Corrective Action Planned: The State of Oklahoma/Office of Management and Enterprise Services partially agrees with this finding. See corrective action plan located in the corrective action plan section of the report. Auditor Response: The State Auditor & Inspector’s Office questioned $248,779 to one subrecipient for SFY 2023 based on the expenditures for goods or services both needing to be within the covered period and occurring within the covered period. Therefore, since the subrecipient payments were after the covered period (December 31, 2021), the finding will stand. Further, since there was not a risk assessment performed during the year and the Single Audit tracking was not performed for SFY 2022 for 2 of the 3 subrecipients, the finding will stand.
FINDING NO: 2023-096 (Repeat finding 2022-071) STATE AGENCY: State of Oklahoma FEDERAL AGENCY: US Department of the Treasury ALN: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund (CRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $248,779 Criteria: 2 CFR § 200.303 - Internal controls 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.” 2 CFR § 200.332 - Requirements for pass-through entities states in part, “All pass-through entities must: … (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient's name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). (2) All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see § 200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency; … (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). (d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. … .” The Department of the Treasury Federal Register, Vol. 86, No. 10 from January 15, 2021 states in part, “The CARES [Coronavirus Aid, Relief, & Economic Security Act] Act provides that payments from the Fund may only be used to cover costs that— 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021. … This guidance applies in a like manner to costs of subrecipients. Thus, a grant or loan, for example, provided by a recipient using payments from the Fund must be used by the subrecipient only to purchase (or reimburse a purchase of) goods or services for which receipt both is needed within the covered period and occurs within the covered period. The direct recipient of payments from the Fund is ultimately responsible for compliance with this limitation on use of payments from the Fund. Condition and Context: Per the GAAP Package Z - Schedule of Expenditures of Federal Awards (SEFA), the State of Oklahoma reported $249,660.69 in CRF cash basis expenditures reimbursed to subrecipients by the CARES FORWARD1 team. We tested all five (5) reimbursement transactions for one subrecipient and noted the following: • One (20%) of the five (5) transactions totaling $4,594.40 contained no supporting documentation. • Four (80%) of the five (5) transactions totaling $245,066.29 contained costs totaling $244,184.29 that were incurred by the subrecipient after 12/31/2021 (covered period). The State of Oklahoma – CARES FORWARD team failed to perform an adequate review to ensure the subrecipient purchased (or reimbursed a purchase of) goods or services for which receipt both is needed within the covered period and occurs within the covered period. Further, we noted Award documents provided to the subrecipient did not include the terms and conditions of the subaward. Also, the CARES FORWARD team did not perform a risk assessment on subrecipients receiving continued funding during SFY 2023. Lastly, while performing Single Audit monitoring testwork on three (3) subrecipients for SFY 2022, we determined that the State of Oklahoma - CARES FORWARD team did not perform tracking on two (2) of the subrecipients that received CRF funds. For the two subrecipients, there is no documentation to show that OMES received the SFY 2022 Single Audit, evaluated whether the subrecipient took corrective action on all significant developments that affect the subaward, and issued a management decision for any audit findings pertaining to the federal award. Cause: Adequate controls were not in place to ensure the monitoring process utilized by the CARES FORWARD team considered the Department of Treasury guidance when determining whether the financial activities of the subrecipients complied with Federal statutes, regulations, and the terms and conditions of the Federal award prior to payment. Also, the State of Oklahoma – CARES FORWARD2 team did not have sufficient internal controls in place to ensure subrecipient award documentation included the terms and conditions of the subaward in accordance with 2 CFR § 200.332. Further, the State of Oklahoma – CARES FORWARD team did not have sufficient internal controls in place to ensure subrecipients are assessed for risk in accordance with 2 CFR § 200.332. Lastly, the State of Oklahoma – CARES Forward team did not have sufficient internal controls in place to ensure subrecipients are monitored for a Single Audit in accordance with 2 CFR § 200.332. Effect: These deficiencies resulted in questioned costs of $248,779 goods or services for which receipt both was needed and occurred within the covered period. The $248,779 in questioned costs related to subrecipient expenses is included in Finding 2023-108 (Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance) as well, as the same transactions failed to meet requirements under all these compliance areas. The amount should not be considered cumulative. The State of Oklahoma – CARES FORWARD team did not comply with 2 CFR § 200.332. Recommendation: We recommend for future grants that the State of Oklahoma strengthen their control process related to subrecipients to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: September 2022 Corrective Action Planned: The State of Oklahoma/Office of Management and Enterprise Services partially agrees with this finding. See corrective action plan located in the corrective action plan section of the report. Auditor Response: The State Auditor & Inspector’s Office questioned $248,779 to one subrecipient for SFY 2023 based on the expenditures for goods or services both needing to be within the covered period and occurring within the covered period. Therefore, since the subrecipient payments were after the covered period (December 31, 2021), the finding will stand. Further, since there was not a risk assessment performed during the year and the Single Audit tracking was not performed for SFY 2022 for 2 of the 3 subrecipients, the finding will stand.
FINDING NO: 2023-096 (Repeat finding 2022-071) STATE AGENCY: State of Oklahoma FEDERAL AGENCY: US Department of the Treasury ALN: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund (CRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $248,779 Criteria: 2 CFR § 200.303 - Internal controls 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.” 2 CFR § 200.332 - Requirements for pass-through entities states in part, “All pass-through entities must: … (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient's name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). (2) All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see § 200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency; … (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). (d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. … .” The Department of the Treasury Federal Register, Vol. 86, No. 10 from January 15, 2021 states in part, “The CARES [Coronavirus Aid, Relief, & Economic Security Act] Act provides that payments from the Fund may only be used to cover costs that— 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021. … This guidance applies in a like manner to costs of subrecipients. Thus, a grant or loan, for example, provided by a recipient using payments from the Fund must be used by the subrecipient only to purchase (or reimburse a purchase of) goods or services for which receipt both is needed within the covered period and occurs within the covered period. The direct recipient of payments from the Fund is ultimately responsible for compliance with this limitation on use of payments from the Fund. Condition and Context: Per the GAAP Package Z - Schedule of Expenditures of Federal Awards (SEFA), the State of Oklahoma reported $249,660.69 in CRF cash basis expenditures reimbursed to subrecipients by the CARES FORWARD1 team. We tested all five (5) reimbursement transactions for one subrecipient and noted the following: • One (20%) of the five (5) transactions totaling $4,594.40 contained no supporting documentation. • Four (80%) of the five (5) transactions totaling $245,066.29 contained costs totaling $244,184.29 that were incurred by the subrecipient after 12/31/2021 (covered period). The State of Oklahoma – CARES FORWARD team failed to perform an adequate review to ensure the subrecipient purchased (or reimbursed a purchase of) goods or services for which receipt both is needed within the covered period and occurs within the covered period. Further, we noted Award documents provided to the subrecipient did not include the terms and conditions of the subaward. Also, the CARES FORWARD team did not perform a risk assessment on subrecipients receiving continued funding during SFY 2023. Lastly, while performing Single Audit monitoring testwork on three (3) subrecipients for SFY 2022, we determined that the State of Oklahoma - CARES FORWARD team did not perform tracking on two (2) of the subrecipients that received CRF funds. For the two subrecipients, there is no documentation to show that OMES received the SFY 2022 Single Audit, evaluated whether the subrecipient took corrective action on all significant developments that affect the subaward, and issued a management decision for any audit findings pertaining to the federal award. Cause: Adequate controls were not in place to ensure the monitoring process utilized by the CARES FORWARD team considered the Department of Treasury guidance when determining whether the financial activities of the subrecipients complied with Federal statutes, regulations, and the terms and conditions of the Federal award prior to payment. Also, the State of Oklahoma – CARES FORWARD2 team did not have sufficient internal controls in place to ensure subrecipient award documentation included the terms and conditions of the subaward in accordance with 2 CFR § 200.332. Further, the State of Oklahoma – CARES FORWARD team did not have sufficient internal controls in place to ensure subrecipients are assessed for risk in accordance with 2 CFR § 200.332. Lastly, the State of Oklahoma – CARES Forward team did not have sufficient internal controls in place to ensure subrecipients are monitored for a Single Audit in accordance with 2 CFR § 200.332. Effect: These deficiencies resulted in questioned costs of $248,779 goods or services for which receipt both was needed and occurred within the covered period. The $248,779 in questioned costs related to subrecipient expenses is included in Finding 2023-108 (Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance) as well, as the same transactions failed to meet requirements under all these compliance areas. The amount should not be considered cumulative. The State of Oklahoma – CARES FORWARD team did not comply with 2 CFR § 200.332. Recommendation: We recommend for future grants that the State of Oklahoma strengthen their control process related to subrecipients to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: September 2022 Corrective Action Planned: The State of Oklahoma/Office of Management and Enterprise Services partially agrees with this finding. See corrective action plan located in the corrective action plan section of the report. Auditor Response: The State Auditor & Inspector’s Office questioned $248,779 to one subrecipient for SFY 2023 based on the expenditures for goods or services both needing to be within the covered period and occurring within the covered period. Therefore, since the subrecipient payments were after the covered period (December 31, 2021), the finding will stand. Further, since there was not a risk assessment performed during the year and the Single Audit tracking was not performed for SFY 2022 for 2 of the 3 subrecipients, the finding will stand.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING NO: 2023-014 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Subrecipient Monitoring QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.332(d) – Requirements for Pass-through Entities states in part, “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 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. 2 CFR 200.332 states in part, “All pass-through entities must: … (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.” Condition and Context: The State of Oklahoma transferred all CSLFRF funds (except for administrative funds used by OMES-Grants Management Office (GMO) and the Legislative Service Bureau) to state agencies for them to execute projects they are charged with administering. The Oklahoma State Department of Health (agency #340), Health Care Workforce Training Commission (agency #619), and Department of Human Services (agency #830) had the material subrecipient monitoring activity for SFY 2023. These three state agencies notified their subrecipients of $750,000 federal expenditure threshold requiring a Single Audit per 2 CFR § 200.501 - Audit Requirements; however, they failed to track subrecipients that expended federal expenditures for CSLFRF, or in combination with other federal programs, to ensure that every subrecipient expending over $750,000 obtained a Single Audit. Cause: State agencies 340, 619, and 830 did not have sufficient processes or internal controls in place to ensure subrecipient Single Audits were tracked in accordance with 2 CFR § 200.332(d) and (f). Effect: State agencies 340, 619, and 830 may not be aware of potential subrecipient Single Audits with noncompliance issues related to the CSLFRF program. In addition, the agencies may fail to ensure that the subrecipient took appropriate corrective action on findings within the required timeframe. Recommendation: We recommend state agencies 340, 619, and 830 develop policies and procedures and internal controls to ensure that all CSLFRF subrecipients are tracked to determine if the subrecipient had $750,000 in total federal expenditures for the year. In addition, we recommend state agencies utilize a track sheet that documents the following: • Subrecipient SFY CSLFRF expenditures • If subrecipient is subject to single audit (y/n) • If subrecipient had CSLFRF findings (y/n) • Concerns with CSLFRF findings • Date single audit is received from subrecipient or obtained from the federal audit clearing house • Single Audit Report period (period covered by the single audit) • Whether the state agency received a copy of the required audit from the subrecipient within 9 months of the subrecipient's fiscal year end • Dates of follow-ups made to the subrecipient requesting single audits • Notes to document additional information such as delays in audit reports • Whether the state agency issued a management decision on audit findings within 6 months after receipt of the subrecipient's audit report • Whether the state agency ensured that subrecipients took appropriate and timely corrective action on all CSLFRF audit findings Views of Responsible Official(s) Contact Person: OMES: Parker Wise 619: Sara Librandi, Kami Fullingim 340: Diane Brown, Danielle Smith, Tracey Douglas 830: Jaretta Murphy, Lindsey Kanaly, Danielle Durkee, Katey Campbell Anticipated Completion Date: 6/30/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office partially agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report. Auditor Response: State agency 830 states “a process is already in place through the Office of Inspector General (OIG) to identify subrecipients exceeding the $750,000 threshold”; however, subrecipients with expenditures below the threshold must also be tracked to ensure total federal expenditures from all federal awards obtain a Single Audit. 2 CFR 200.332 states in part, “All pass-through entities must: … (f) Verify that every subrecipient is audited”. Therefore, state agency 830 acting as the pass-through entity must verify every subrecipient is audited. In addition, contractual language requiring the subrecipient submit a single audit if the threshold is met does not release the passthrough entity of ensuring the subrecipient’s total federal expenditures are tracked. We have encountered instances where subrecipients fail to provide single audits to pass-through entities; therefore, increasing the chances of the passthrough entity not issuing a management decision for applicable audit findings pertaining only to the federal award provided.
FINDING 2022-004 Subject: Formula Grants for Rural Areas and Tribal Transit Program - Subrecipient Monitoring Federal Agency: Department of Transportation Federal Programs: COVID-19 - Formula Grants for Rural Areas and Tribal Transit Program, Formula Grants for Rural Areas and Tribal Transit Program Assistance Listings Number: 20.509 Federal Award Numbers and Years (or Other Identifying Numbers): EDS#A249-20-G20032, EDS#A249-22-G210088, EDS#A249-22-G210124 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County 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 Formula Grants for Rural Areas and Tribal Transit Program funds (Transit program) passed through to a subrecipient. The County received and passed through to a subrecipient $664,071 in Transit program funds. The County is to clearly identify the award and applicable requirements to the subrecipient, evaluate the risk of noncompliance related to the subrecipient to determine appropriate monitoring of the subaward, and monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. As part of managing the award, the County is to evaluate the subrecipients risk of noncompliance to determine the extent of monitoring. Such factors to consider would include the subrecipients prior experience with the award or similar awards, results of previous audits, any personnel or system changes at the subrecipient, and the extent and results of federal reviews. Based on the results of the County's risk of noncompliance evaluation, the extent of monitoring can be determined. Monitoring activities include, but are not limited to, reviewing financial and performance reports, ensuring audits are obtained as required, follow-up to ensure appropriate action was taken on deficiencies identified during an audit, issuing management decisions for applicable findings related to the federal award, and ensuring audit findings related to the subaward are resolved. The County did not have any policies or procedures in place to evaluate the subrecipient's risk of noncompliance or to monitor the activity of the subrecipient. Per inquiry of the County, it was determined an evaluation of the risk of noncompliance for the subrecipient was not completed, nor did the subrecipient's files support any such evaluation. In addition, while the subrecipient provided reimbursement requests, the requests did not include sufficient evidence for the County to ascertain if the subrecipient was complying with the grant requirements. The County also did not request or review the subrecipient's audit or monitoring reports to identify any potential noncompliance, determine if management decisions were needed, or if any issues identified were properly resolved. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.332 Requirements for pass-through entities. (Revised Uniform Guidance) states in part: "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). (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 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 cross-cutting 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. Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the County did not properly evaluate the subrecipients risk of noncompliance or adequately monitor the subrecipient. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County implement a proper system of internal controls, including segregation of duties, to evaluate the subrecipients risk of noncompliance and adequately monitor the subrecipient. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place, as needed, to evaluate and monitor its subrecipient. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Formula Grants for Rural Areas and Tribal Transit Program - Subrecipient Monitoring Federal Agency: Department of Transportation Federal Programs: COVID-19 - Formula Grants for Rural Areas and Tribal Transit Program, Formula Grants for Rural Areas and Tribal Transit Program Assistance Listings Number: 20.509 Federal Award Numbers and Years (or Other Identifying Numbers): EDS#A249-20-G20032, EDS#A249-22-G210088, EDS#A249-22-G210124 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County 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 Formula Grants for Rural Areas and Tribal Transit Program funds (Transit program) passed through to a subrecipient. The County received and passed through to a subrecipient $664,071 in Transit program funds. The County is to clearly identify the award and applicable requirements to the subrecipient, evaluate the risk of noncompliance related to the subrecipient to determine appropriate monitoring of the subaward, and monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. As part of managing the award, the County is to evaluate the subrecipients risk of noncompliance to determine the extent of monitoring. Such factors to consider would include the subrecipients prior experience with the award or similar awards, results of previous audits, any personnel or system changes at the subrecipient, and the extent and results of federal reviews. Based on the results of the County's risk of noncompliance evaluation, the extent of monitoring can be determined. Monitoring activities include, but are not limited to, reviewing financial and performance reports, ensuring audits are obtained as required, follow-up to ensure appropriate action was taken on deficiencies identified during an audit, issuing management decisions for applicable findings related to the federal award, and ensuring audit findings related to the subaward are resolved. The County did not have any policies or procedures in place to evaluate the subrecipient's risk of noncompliance or to monitor the activity of the subrecipient. Per inquiry of the County, it was determined an evaluation of the risk of noncompliance for the subrecipient was not completed, nor did the subrecipient's files support any such evaluation. In addition, while the subrecipient provided reimbursement requests, the requests did not include sufficient evidence for the County to ascertain if the subrecipient was complying with the grant requirements. The County also did not request or review the subrecipient's audit or monitoring reports to identify any potential noncompliance, determine if management decisions were needed, or if any issues identified were properly resolved. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.332 Requirements for pass-through entities. (Revised Uniform Guidance) states in part: "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). (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 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 cross-cutting 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. Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the County did not properly evaluate the subrecipients risk of noncompliance or adequately monitor the subrecipient. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County implement a proper system of internal controls, including segregation of duties, to evaluate the subrecipients risk of noncompliance and adequately monitor the subrecipient. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place, as needed, to evaluate and monitor its subrecipient. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $13,177,707. During the audit period, the County provided subawards of SLFRF funds to other entities. As a pass-through entity, the County must: 1. Identify the award and the applicable requirements to each subrecipient. 2. Evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purpose, complies with the terms and conditions of the subaward, and achieves performance goals. Subawards, totaling $2,503,400, were provided to four different entities. Three of the subrecipient agreements associated with the subawards were selected for testing. For the three agreements tested, the following information was incomplete or missing: 1. The subrecipients unique entity identifier. 2. The federal award identification number (FAIN). 3. The federal award date of award to the recipient by the federal agency. 4. The name of the federal awarding agency, pass-through entity (auditee), and contact information for awarding official of the pass-through entity (auditee). 5. The Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement. Furthermore, the County did not have an evaluation of the subrecipients' risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. See definition for Subaward in ? 200.1 of this part. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ? 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (iii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with ? 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determined the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the County was not properly designed, nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The County was responsible for providing a subaward agreement, with all required elements, and monitoring the non-profit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2022-001 ? Subrecipient Monitoring Cluster: Research and Development Agency: Department of Commerce and Department of Health and Human Services Award Names: Standards/Guidance for Rapid Qualification of Metal-Based Additive Manufacturing and Development and Testing a Field-based Hazard/Near-Miss Sharing System for Commercial Fishing Vessels Award Numbers: 70NANB21H038 and U01OH012288 Assistance Listing Title: Measurement and Engineering Research and Standards and Occupational Safety and Health Program Assistance Listing Number: 11.609 and 93.262 Award Year: FY 2022 Criteria 2 CFR 200.332(d) notes that 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 2 CFR 200.521. 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Condition Through our testing of 4 subrecipients out of a population of 10, we were able to obtain a documented initial risk assessment for each subrecipient selected and other evidence of monitoring such as meetings with the subrecipients. However, we were unable to obtain evidence that the Company obtained and reviewed the annual Uniform Guidance report or annual audited financial statements (if the entity was not subject to a Uniform Guidance audit) for each subrecipient selected for testing. Cause The Company performed an initial risk assessment but did not understand that obtaining the Uniform Guidance reports or financial statements needed to be completed annually as part of their subrecipient monitoring procedures. Effect The lack of an annual review of subrecipient audits may result in ineligible subrecipients receiving federal awards, subrecipient findings not being fully remediated and other monitoring procedures (based on risk level) not being performed. Questioned Costs None noted. Recommendation We recommend the Company implement a policy to review Uniform Guidance reports (or audited financial statements to the extent Uniform Guidance reports are not available) on an annual basis. When reviewing the reports, they should understand the type of opinion(s) expressed and whether there were any findings associated with their awards, document their review and assess whether there is any change in the risk assessment and subsequent monitoring needed of each subrecipient. Management? Views and Corrective Action Plan Management?s Views and Corrective Action Plan are included at the end of this report.
2022-001 ? Subrecipient Monitoring Cluster: Research and Development Agency: Department of Commerce and Department of Health and Human Services Award Names: Standards/Guidance for Rapid Qualification of Metal-Based Additive Manufacturing and Development and Testing a Field-based Hazard/Near-Miss Sharing System for Commercial Fishing Vessels Award Numbers: 70NANB21H038 and U01OH012288 Assistance Listing Title: Measurement and Engineering Research and Standards and Occupational Safety and Health Program Assistance Listing Number: 11.609 and 93.262 Award Year: FY 2022 Criteria 2 CFR 200.332(d) notes that 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 2 CFR 200.521. 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Condition Through our testing of 4 subrecipients out of a population of 10, we were able to obtain a documented initial risk assessment for each subrecipient selected and other evidence of monitoring such as meetings with the subrecipients. However, we were unable to obtain evidence that the Company obtained and reviewed the annual Uniform Guidance report or annual audited financial statements (if the entity was not subject to a Uniform Guidance audit) for each subrecipient selected for testing. Cause The Company performed an initial risk assessment but did not understand that obtaining the Uniform Guidance reports or financial statements needed to be completed annually as part of their subrecipient monitoring procedures. Effect The lack of an annual review of subrecipient audits may result in ineligible subrecipients receiving federal awards, subrecipient findings not being fully remediated and other monitoring procedures (based on risk level) not being performed. Questioned Costs None noted. Recommendation We recommend the Company implement a policy to review Uniform Guidance reports (or audited financial statements to the extent Uniform Guidance reports are not available) on an annual basis. When reviewing the reports, they should understand the type of opinion(s) expressed and whether there were any findings associated with their awards, document their review and assess whether there is any change in the risk assessment and subsequent monitoring needed of each subrecipient. Management? Views and Corrective Action Plan Management?s Views and Corrective Action Plan are included at the end of this report.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In accordance with the Uniform Guidance in 2 CFR Section 200.331, a pass-through entity (PTE) must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. reviewing financial and programmatic (performance and special reports) required by the PTE; 2. following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means; 3. issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. Furthermore, under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). If a subaward/subcontract was subject to reporting under the Transparency Act, the action was required to be reported in FSRS no later than the last day of the month following the month in which the subaward/subcontract amendment obligation was made or in the subcontract award/subcontract modification was made. Conditions ? Our examination of the program?s subrecipient monitoring requirements includes the review and approval of financial and performance reports by the program managers. The financial reports are prepared by APS? grants administrator and submitted to the program managers whilst the performance reports and information are submitted by the subrecipients directly to the program managers. Of the program?s nineteen (19) subrecipients, we examined fifteen (15) subrecipients and observed that there was no consistent evidentiary documentation to support the monitoring oversight process performed by the respective program managers. However, we noted that APS did perform the required monitoring procedures and oversight of the subrecipients? financial and programmatic activities based on our review of program reports submitted to NSF, e-mail communication and minutes of meetings held during the year. We selected four (4) subrecipients and noted that for all the subrecipients selected, APS was unable to provide consistent evidentiary documentation to show that it had reviewed the subrecipients? single audit reports during the year. A subsequent review of the subrecipients? audit reports was performed and no reported deficiencies relating to APS? subawards was noted. We also tested a sample of two subrecipients and our examination of the monitoring and reporting requirements revealed that APS did not report the information on a subaward of $30,000 or more in federal funds and three grant amendments in the FSRS Reporting System to fulfil the FFATA requirements. Cause ? Management does not have adequate internal controls and policies in place to ensure that the monitoring controls performed over its subrecipients are documented appropriately and in a timely manner. There is also a lack of established monitoring and internal control procedures in place to ensure that reports required under the Transparency Act are prepared and submitted timely in FSRS Reporting System resulted in APS? noncompliance with the reporting requirements.Effect or potential effect ? APS is not in compliance with the subrecipient monitoring requirements as it did not maintain consistent documented evidence of its monitoring of subrecipients. Failure to comply with the reporting requirements of the Uniform Guidance could result in the awarding agency taking action such as reducing future funding. Questioned Costs ? None. Context ? These are conditions identified per review of APS? compliance with specified compliance requirements using a statistically valid sample. Recommendations ? BDO recommends that APS implement policies, procedures and controls that will ensure that all requisite reports are reviewed, and evidence of review are consistently documented and maintained. BDO also recommends that APS establish policies and procedure over the preparation and timely submission of reports required under the Transparency Act to ensure compliance with reporting requirements. Views of Responsible Officials - APS concurs with this finding. APS?s corrective action is described in the Management?s Corrective Action Plan included below.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number or Year (or Other Identifying Number): CY2021 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The City received a total State and Local Fiscal Recovery Funds (SLFRF) allocation of $18,042,360. The City enlisted a non-profit, Heart City Health Center, Inc., to assist with public health information and paid them $50,000. The payment was made under the Responding to Public Health and Economic Impacts of COVID-19 eligible use category. Documentation to support the payment included an invoice from the Heart City Health Center, Inc., Board of Works Resolution 21-R-19, and Ordinance 5861. The Board of Works approved Resolution 21-R-19 on December 28, 2021. The resolution states in part, "Heart City Health Center is a separate legal entity from the City of Elkhart and as a separate legal entity, requires the formation of a subrecipient agreement to transfer funds from the City's ARPA Coronavirus State and Local Fiscal Recovery Funds allocation to Heart City Health . . . now, therefore be it resolved, the Board of Public Works approves Heart City Health Center Inc. as a subrecipient of fifty thousand dollars in ARPA state and local fiscal recovery funds, and authorizes the Department of Law to prepare an appropriates subrecipient agreement for execution by the Board of Works and Heart City Health Center Inc. for the purposes approved herein . . ." The City provided SLFRF award funds to the Heart City Health Center, Inc. to carry out a program on the City's behalf, making the Heart City Health Center, Inc. a subrecipient of the City, as noted in their resolution, and, therefore, subject to subrecipient monitoring. The City was unable provide a copy of the subaward agreement or other supporting documentation to show evaluation of the subrecipient's risk of noncompliance or monitoring activities demonstrating compliance with the subrecipient monitoring requirement. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.331(a) states in part: "Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. . . . Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non- Federal entity: (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and . . ." 2 CFR 200.332 states in part: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward . . . (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ? 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports; (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with ? 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the passthrough entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521. (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. . . ." Cause The system of internal controls as established by management of the City was not properly designed nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City was responsible for providing a subaward agreement and monitoring the nonprofit. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls and develop policies and procedures to ensure subrecipients are provided with an adequate subaward agreement and monitored as appropriate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding Number: 2022-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Programs AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 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: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: Federal award identification; 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; 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. 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: The negotiated indirect cost rate between the pass-through entity and the subrecipient; The de minimis indirect cost rate The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. 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 Appropriate terms and conditions concerning closeout of the subaward. 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. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in ? 200.208. 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: Reviewing financial and performance reports required by the pass-through entity. 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. 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. 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. 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: Providing subrecipients with training and technical assistance on program-related matters; and Performing on-site reviews of the subrecipient's program operations; Arranging for agreed-upon-procedures engagements as described in ? 200.425. 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. 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. 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.
Finding Number: 2022-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Programs AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 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: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: Federal award identification; 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; 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. 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: The negotiated indirect cost rate between the pass-through entity and the subrecipient; The de minimis indirect cost rate The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. 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 Appropriate terms and conditions concerning closeout of the subaward. 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. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in ? 200.208. 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: Reviewing financial and performance reports required by the pass-through entity. 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. 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. 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. 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: Providing subrecipients with training and technical assistance on program-related matters; and Performing on-site reviews of the subrecipient's program operations; Arranging for agreed-upon-procedures engagements as described in ? 200.425. 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. 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. 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.
Finding Number: 2022-007 Repeat Finding: Yes Type of Finding: Material Weakness in Internal Control and Material Noncompliance Description: Subrecipient Monitoring and Management Major Programs AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 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: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes: Federal award identification; 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; 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. 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: The negotiated indirect cost rate between the pass-through entity and the subrecipient; The de minimis indirect cost rate The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. 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 Appropriate terms and conditions concerning closeout of the subaward. 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. Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in ? 200.208. 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: Reviewing financial and performance reports required by the pass-through entity. 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. 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. 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. 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: Providing subrecipients with training and technical assistance on program-related matters; and Performing on-site reviews of the subrecipient's program operations; Arranging for agreed-upon-procedures engagements as described in ? 200.425. 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. 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. 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.
Federal Program: Assistance Listing #14.228, Community Development Block Grant, U.S. Department of Housing and Urban Development, Passed through the Pennsylvania Department of Community and Economic Development, Pass-Through Entity Identifying Numbers: C000066177, C000067301, C000070907, C000073805, C000076178, C000075471 and C000062142 Assistance Listing #21.023, Emergency Rental Assistance Program, U.S. Department of Treasury, Passed through the Pennsylvania Department of Human Services, Pass-Through Entity Identifying Number: N/A Prior Year Finding Number 2021-004 Criteria: The requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), §200.331 Requirements for Pass-through Entities, requires entities who pass federal funding through to subrecipients evaluate each subrecipient's risk of noncompliance. As detailed in 2 CFR sections 200.331(d) through (f), the Uniform Guidance requires pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient, as detailed in 2 CFR section 200.521. Condition: As part of our follow-up on previous audit findings, it was noted that the County is not performing monitoring activities over its subrecipient in compliance with the Uniform Guidance. Additionally, it was noted that the County did not issue a management decision for an audit finding pertaining to the Federal award provided to the subrecipient in a prior year. Questioned Costs: N/A Cause: The County does not have in place sufficient monitoring activities for its subrecipient, representing a significant deficiency in internal control over compliance. Effect: The County is not in compliance with certain requirements of the Uniform Guidance. Context: Title IV-E funding is passed through to the Lycoming-Clinton Mental Health and Intellectual Disabilities Joinder Board. The governing body of the Joinder consists of the Board of Commissioners of Lycoming and Clinton Counties, which allow each County 50% control. While it has been determined that the County has risk assessment and subrecipient monitoring policies and procedures in place for its pass-through entities related to other federal programs, management at the County has taken the position that the Title IV-E program is being monitored because of the unique nature of the funding being passed through to the Joinder Board. Recommendation: We recommend that County management perform monitoring activities for the Title IV-E program similar to the policies and procedures it has in place for its other pass-through activities. Views of Responsible Officials and Planned Corrective Actions: Management understands and is working to provide better oversight and monitoring of entities that receive pass-through grant dollars. See corrective action plan.
Federal Program: Assistance Listing #14.228, Community Development Block Grant, U.S. Department of Housing and Urban Development, Passed through the Pennsylvania Department of Community and Economic Development, Pass-Through Entity Identifying Numbers: C000066177, C000067301, C000070907, C000073805, C000076178, C000075471 and C000062142 Assistance Listing #21.023, Emergency Rental Assistance Program, U.S. Department of Treasury, Passed through the Pennsylvania Department of Human Services, Pass-Through Entity Identifying Number: N/A Prior Year Finding Number 2021-004 Criteria: The requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), §200.331 Requirements for Pass-through Entities, requires entities who pass federal funding through to subrecipients evaluate each subrecipient's risk of noncompliance. As detailed in 2 CFR sections 200.331(d) through (f), the Uniform Guidance requires pass-through entities to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient, as detailed in 2 CFR section 200.521. Condition: As part of our follow-up on previous audit findings, it was noted that the County is not performing monitoring activities over its subrecipient in compliance with the Uniform Guidance. Additionally, it was noted that the County did not issue a management decision for an audit finding pertaining to the Federal award provided to the subrecipient in a prior year. Questioned Costs: N/A Cause: The County does not have in place sufficient monitoring activities for its subrecipient, representing a significant deficiency in internal control over compliance. Effect: The County is not in compliance with certain requirements of the Uniform Guidance. Context: Title IV-E funding is passed through to the Lycoming-Clinton Mental Health and Intellectual Disabilities Joinder Board. The governing body of the Joinder consists of the Board of Commissioners of Lycoming and Clinton Counties, which allow each County 50% control. While it has been determined that the County has risk assessment and subrecipient monitoring policies and procedures in place for its pass-through entities related to other federal programs, management at the County has taken the position that the Title IV-E program is being monitored because of the unique nature of the funding being passed through to the Joinder Board. Recommendation: We recommend that County management perform monitoring activities for the Title IV-E program similar to the policies and procedures it has in place for its other pass-through activities. Views of Responsible Officials and Planned Corrective Actions: Management understands and is working to provide better oversight and monitoring of entities that receive pass-through grant dollars. See corrective action plan.
FINDING 2022-004 Subject: Formula Grants for Rural Areas and Tribal Transit Program - Subrecipient Monitoring Federal Agency: Department of Transportation Federal Programs: COVID-19 - Formula Grants for Rural Areas and Tribal Transit Program, Formula Grants for Rural Areas and Tribal Transit Program Assistance Listings Number: 20.509 Federal Award Numbers and Years (or Other Identifying Numbers): EDS#A249-20-G20032, EDS#A249-22-G210088, EDS#A249-22-G210124 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County 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 Formula Grants for Rural Areas and Tribal Transit Program funds (Transit program) passed through to a subrecipient. The County received and passed through to a subrecipient $664,071 in Transit program funds. The County is to clearly identify the award and applicable requirements to the subrecipient, evaluate the risk of noncompliance related to the subrecipient to determine appropriate monitoring of the subaward, and monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. As part of managing the award, the County is to evaluate the subrecipients risk of noncompliance to determine the extent of monitoring. Such factors to consider would include the subrecipients prior experience with the award or similar awards, results of previous audits, any personnel or system changes at the subrecipient, and the extent and results of federal reviews. Based on the results of the County's risk of noncompliance evaluation, the extent of monitoring can be determined. Monitoring activities include, but are not limited to, reviewing financial and performance reports, ensuring audits are obtained as required, follow-up to ensure appropriate action was taken on deficiencies identified during an audit, issuing management decisions for applicable findings related to the federal award, and ensuring audit findings related to the subaward are resolved. The County did not have any policies or procedures in place to evaluate the subrecipient's risk of noncompliance or to monitor the activity of the subrecipient. Per inquiry of the County, it was determined an evaluation of the risk of noncompliance for the subrecipient was not completed, nor did the subrecipient's files support any such evaluation. In addition, while the subrecipient provided reimbursement requests, the requests did not include sufficient evidence for the County to ascertain if the subrecipient was complying with the grant requirements. The County also did not request or review the subrecipient's audit or monitoring reports to identify any potential noncompliance, determine if management decisions were needed, or if any issues identified were properly resolved. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.332 Requirements for pass-through entities. (Revised Uniform Guidance) states in part: "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). (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 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 cross-cutting 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. Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the County did not properly evaluate the subrecipients risk of noncompliance or adequately monitor the subrecipient. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County implement a proper system of internal controls, including segregation of duties, to evaluate the subrecipients risk of noncompliance and adequately monitor the subrecipient. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place, as needed, to evaluate and monitor its subrecipient. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Formula Grants for Rural Areas and Tribal Transit Program - Subrecipient Monitoring Federal Agency: Department of Transportation Federal Programs: COVID-19 - Formula Grants for Rural Areas and Tribal Transit Program, Formula Grants for Rural Areas and Tribal Transit Program Assistance Listings Number: 20.509 Federal Award Numbers and Years (or Other Identifying Numbers): EDS#A249-20-G20032, EDS#A249-22-G210088, EDS#A249-22-G210124 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The County 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 Formula Grants for Rural Areas and Tribal Transit Program funds (Transit program) passed through to a subrecipient. The County received and passed through to a subrecipient $664,071 in Transit program funds. The County is to clearly identify the award and applicable requirements to the subrecipient, evaluate the risk of noncompliance related to the subrecipient to determine appropriate monitoring of the subaward, and monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. As part of managing the award, the County is to evaluate the subrecipients risk of noncompliance to determine the extent of monitoring. Such factors to consider would include the subrecipients prior experience with the award or similar awards, results of previous audits, any personnel or system changes at the subrecipient, and the extent and results of federal reviews. Based on the results of the County's risk of noncompliance evaluation, the extent of monitoring can be determined. Monitoring activities include, but are not limited to, reviewing financial and performance reports, ensuring audits are obtained as required, follow-up to ensure appropriate action was taken on deficiencies identified during an audit, issuing management decisions for applicable findings related to the federal award, and ensuring audit findings related to the subaward are resolved. The County did not have any policies or procedures in place to evaluate the subrecipient's risk of noncompliance or to monitor the activity of the subrecipient. Per inquiry of the County, it was determined an evaluation of the risk of noncompliance for the subrecipient was not completed, nor did the subrecipient's files support any such evaluation. In addition, while the subrecipient provided reimbursement requests, the requests did not include sufficient evidence for the County to ascertain if the subrecipient was complying with the grant requirements. The County also did not request or review the subrecipient's audit or monitoring reports to identify any potential noncompliance, determine if management decisions were needed, or if any issues identified were properly resolved. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.332 Requirements for pass-through entities. (Revised Uniform Guidance) states in part: "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). (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 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 cross-cutting 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. Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the County did not properly evaluate the subrecipients risk of noncompliance or adequately monitor the subrecipient. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County implement a proper system of internal controls, including segregation of duties, to evaluate the subrecipients risk of noncompliance and adequately monitor the subrecipient. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place, as needed, to evaluate and monitor its subrecipient. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.