Finding Text
U.S. Department of Labor
Iowa Workforce Development
Federal Financial Assistance Listing 17.258/17.259/17.278
WIOA Cluster
Subrecipient Monitoring
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective
internal control over the federal award that provides assurance that the entity is managing the
federal award in compliance with federal statutes, regulations, and conditions of the federal award.
Subrecipient monitoring requirements are contained in 2 CFR 200.331 through 2 CFR 200.333 and
include requirements to identify the award and applicable requirements to the subrecipient and
monitor the activities of the subrecipient.
Condition – Iowa Workforce Development did not formally communicate subrecipient
monitoring requirements to the County. Consequently, the County did not formally
communicate the required information to the subrecipient. No subrecipient agreement was
executed. In addition, no monitoring activities were documented.
Cause – The County did not have an internal control process in place to ensure subrecipient
monitoring requirements were met.
Effect – Without the proper communication of applicable requirements and monitoring
of the subrecipient, there is a possibility that federal statutes, regulations, and the
terms and conditions of the federal award were not complied with.
Questioned Costs – None reported.
Context/Sampling – $1,437,054 was passed through to one subrecipient during the year ended June
30, 2023.
Repeat Finding from Prior Years – Yes.
Recommendation – We recommend the County implement a control process which includes
the applicable subrecipient monitoring requirements.
View of Responsible Officials – This finding is due in part to the fiscal agent agreement with Iowa
Workforce Development which does not state that subrecipient monitoring has to be done.
Recently, Iowa Workforce Development received a finding from the Department of Labor stating
that the fiscal agent agreements improperly place the liability of disallowed costs off on the fiscal
agent. This was incorrect, the liability was to stay with the local CEOs. In the wake of the finding,
IWD is reissuing the contracts out to the regions to create compliant subrecipient entities within
each, and then new fiscal agent agreements will be issued. Additionally, Johnson County will be
ending it fiscal agent agreement and no longer continue to be the fiscal agent as of June 30, 2023.