Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program: 14.218 Entitlement Grants Cluster: Community Development Block
Grants/Entitlement Grants
Identification Number: B-15-MC-42-0018; B-16-MC-42-0018; B-17-MC-42-0018; B-18-MC-42-0018; B-19-
MC-42-0018
Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of
Performance; Reporting; Special Tests and Provisions
Type of Finding: Material weakness in internal control over major program; Noncompliance
Criteria: Section 2 CFR 200.331 of the Uniform Guidance states that pass-thru entities must 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. This evaluation may include, but
is not limited to, (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 and the extent to which the same
or similar subaward has been audited as a major program; and (3) Whether the subrecipient has new personnel
or new or substantially changed systems. Based on the results of the evaluation, the City would then have to
consider the extent to which monitoring procedures are required. At a minimum, the City must, (1) Review
financial and performance reports required by the City, (2) Follow-up and ensure that the subrecipient takes
timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from
the City detected through audits, on-site reviews, and other means, and (3) Issue a management decision for
audit findings pertaining to the federal award provided to the subrecipient from the City as required by Section
200.521 of the Uniform Guidance. Additionally, the City must perform monitoring visits as stipulated in the
contracts between the City and the subrecipients.
Condition: The City does not have policies and procedures in place to perform the required risk assessment of
subrecipients to determine the extent of monitoring procedures, and then perform and document the monitoring
procedures performed.
Cause: There is no documentation of any subrecipient risk assessment being performed for grants provided to
subrecipients for 2019, and only partial documentation of any subrecipient monitoring procedures being
performed.
Effect: Subrecipient monitoring procedures were not properly performed and documented by the City.
Questioned costs: There are no questioned costs associated with this finding.
Context: The City needs to create and implement a policy to perform risk assessment of subrecipients, in order
to determine the extent of monitoring procedures and performance of the monitoring procedures themselves.
Recommendation: We recommend the City implement procedures to ensure risk assessment of subrecipients
prior to each subaward is performed in accordance with the Uniform Guidance requirements and thoroughly
documented. We further recommend that the required subrecipient monitoring be performed and documented
for each subaward.