Finding Text
FINDING 2023-005
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): FY2021
Pass-Through Entity: Indiana Department of Health
Compliance Requirement: Subrecipient Monitoring
Audit Findings: Material Weakness, Other Matters
Condition and Context
The County expended $4,727,927 in COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds (SLFRF) during the audit period. Of that amount, $939,554 was passed through to two
subrecipients.
As a pass-through entity, the County was required to identify the award and applicable
requirements and monitor the subrecipients. Procedures to monitor its subrecipients included reviewing
the quarterly financial and performance reports as required by the County through the Subrecipient
Agreements.
Both subrecipients submitted quarterly reports for Quarter 2 of 2023, covering the time period from
April 1 through June 30. No other quarterly financial and performance reports were submitted to the County
during the fiscal year. As part of the monitoring the County performed on the subrecipients in March 2023,
it noted the subrecipients had been missing quarterly reports. Despite communications made by the County
to obtain the missing quarterly reports, no other quarterly reports were submitted by the subrecipients.
The lack of effective 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(d) states in part:
"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 the financial and performance reports required by the pass-through entity.
. . ."
Cause
The County's agreements with the subrecipients included reporting requirements, but no
procedures were in place to ensure timely and appropriate reporting occurred. The County's oversight
process for monitoring subrecipient financial and performance reporting for the audit period did not include
adequate follow-up procedures to ensure that required reports were submitted. Subrecipients did not
submit the quarterly reports as requested by the County.
Effect
Without the proper implementation of an effectively designed system of internal controls, including
policies and procedures that provide segregation of duties and additional oversight as needed, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
The lack of sufficient internal controls resulted in the County only receiving one of the required
quarterly financial and performance reports from its subrecipients during the year.
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.
In addition, not meeting the SLFRF subrecipient monitoring requirements increases the likelihood
that County officials and the public will not have access to transparent and accurate information regarding
expenditures of federal awards.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County strengthen its system of internal controls to
ensure that subrecipients are submitting their financial and performance reports timely and accurately, so
that the County can comply with the Subrecipient Monitoring compliance requirement.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.