Finding 1055015 (2022-004)

2022-004 Subrecipient Monitoring Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Effort Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: 2022 and 2021 Pass-through Entity: n/a Questioned Costs: None Type of Finding: Material Weakness in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: The requirements for subrecipient monitoring for the subaward are contained in 31 USC 7502(f)(2) (Single Audit Act Amendments of 1996 (Pub. L. No. 104-156)), 2 CFR sections 200.330, .331, and .501(h); federal awarding agency regulations; and the terms and conditions of the award. The County must do the following: (1) Review the pass-through entity (PTE’s) subrecipient monitoring policies and procedures to gain an understanding of the PTE’s process to identify subawards, evaluate risk of noncompliance, and perform monitoring procedures based upon identified risks. (2) Review subaward documents including the terms and conditions of the subaward to ascertain if, at the time of subaward (or subsequent subaward modification), the PTE made the subrecipient aware of the award information required by 2 CFR section 200.331(a) sufficient for the PTE to comply with federal statutes, regulations, and the terms and conditions of the award. (3) Review the PTE’s documentation of monitoring the subaward and consider if the PTE’s monitoring provided reasonable assurance that the subrecipient used the subaward for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. (4) Ascertain if the PTE verified that subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, met this requirement (2 CFR section 200.331(f)). This verification may be performed as part of the required monitoring under 2 CFR section 200.331(d)(2) to ensure that the subrecipient takes timely and appropriate action on deficiencies detected though audits. Condition: During our testing, it was noted the County did not have adequate controls designed to ensure that subrecipient monitoring requirements were being met. Context: Of the 3 subrecipients tested, all 3 did not included signed, formal agreements between the County and subrecipients. Cause: The County has not designed and implemented internal controls to ensure compliance with subrecipient monitoring requirements. Effect: The County was not communicating the required information to subrecipients through a formal agreement. Recommendation: We recommend the County implement internal control(s) to ensure that required subrecipient monitoring through formal agreements is completed. Repeat Finding: No Views of Responsible Officials: There is no disagreement with the audit finding.