Finding 1088648 (2023-001)

Name of Federal Agency and Pass-Through Agency: U.S. Department of the Treasury Compliance Requirements: Reporting Type of Finding: Significant Deficiency Amount of Questioned Costs: None Identification of Questioned Costs and How Computed: None identified COVID Related: Yes Repeat Finding: Repeat finding of 2022-004. When submitting required quarterly project and expenditure reports, the county improperly identified two entities as being subrecipients instead of contractors. Those responsible for the federal awards did not have a clear understanding of the difference between a subrecipient and a contractor. The reporting guidance was not clear on the definition of a subrecipient versus a contractor and resulted in a misunderstanding. Two entities could potentially be identified as subrecipients and therefore be subject to a single audit when they should not be. Per 2 CFR § 200.331, “a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursements of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor.” We recommend the county review the requirements for determining whether a disbursement qualifies as a payment to a subrecipient or a contractor and ensure all of those that administer federal funding have an understanding of the terms.