Finding Text
2024-006 – Subrecipient Monitoring (Significant Deficiency in Internal Controls over Compliance)
Federal Program Information
Federal Award Title and ALN: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds, 21.027
Federal Awarding Agency: Department of the Treasury
Federal Award ID Number: N/A
Federal Award Year: 2024
Condition: In 5 of 5 samples tested, there was no indication of the City review and approval on
performance reports required of the subrecipient to submit for monitoring. Other monitoring activities
were performed. One contract was reported as a subaward on the preliminary SEFA.
Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities must establish and
maintain effective internal control over the Federal award that provides reasonable assurance that the
non-Federal entities 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).
Per Title 2 US Code of Federal Regulations Part 200.332e(1), in monitoring a subrecipient, a pass-through
entity must review financial and performance reports.
Cause: Inconsistent application of controls throughout the year and with different subrecipients and
entities resulted in poor documentation of control activities, and misclassification of a contract as a
subaward.
Questioned Cost: None.
Effect: Inconsistent application of controls can result in noncompliance due to errors or fraud not being
prevented or detected by employees. The Uniform Guidance requires pass-through entities to review
reports submitted by subrecipients, and the City was not able to substantiate compliance with this
requirement.