Finding 1116868 (2024-002)

Reference Number: 2024-002 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2023-24 Name of Department: County Executive Office Department of Aging Department of Arts and Culture Department of Economic Opportunity Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance; Material Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332(e), all pass-through entities (PTE) must: Monitor the activities of the subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notification from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue management decision for audit findings pertaining to only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. Condition During our audit of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, we selected fifteen (15) subrecipients with active contracts with the County during FY 2023-24. We noted for seven (7) contracts administered by the Departments of Aging, Arts and Culture, and Economic Opportunity, the departments did not perform subrecipient monitoring related to the CSLFRF program during FY 2023-24. This is a repeat finding of 2023-009. Cause Due to the urgency to implement the CSLFRF program, the departments needed more time to enter into contracts with independent CPA firms to monitor the CSLFRF subrecipients and document the reviews in accordance with subrecipient monitoring requirements. Effect Failure to document monitoring results in noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332(e). Questioned Costs Questioned costs were not determinable. Context Of the fifteen (15) subrecipients selected for testing, which totaled $20,981,306, from a population of 76 subrecipients with expenditures totaling $101,950,949, the departments did not perform subrecipient monitoring for seven (7) subrecipients with expenditures totaling $19,118,116. The sample was not a statistically valid sample. Recommendation We recommend the County monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes and maintain sufficient records of monitoring subrecipients in accordance with subrecipient monitoring requirements.