Finding 1116874 (2024-002)

Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires that pass-through entities clearly identify to each subrecipient Federal subaward information, including identifying award numbers, subaward period dates and budget dates, Federal Assistance Listing number and Title, and appropriate terms and conditions concerning closeout of the subaward. Typically this requirement is satisfied by utilizing a subrecipient contract, reflecting all necessary information, and requiring execution showing acknowledgement of the terms by both parties. Condition: Internal controls should be in place to ensure the City is in compliance with all requirements of the federal award program. The City did not properly monitor two subrecipients in compliance with the Uniform Guidance. Context/cause: The City did not have adequate internal controls to ensure compliance with subrecipient monitoring requirements. Allowable cost and procurement testing was performed on the total population of vendors, three (3), paid with the Federal Transit Formula Grant funding. During this testing, it was discovered that two of the three vendors qualify as a subrecipient to the City. The City did not consider these vendors subrecipients in the fiscal year, therefore no subrecipient monitoring was performed. Effects: Noncompliance at the subrecipient level may occur and not be detected by the City. Questioned Costs: None Recommendation: We recommend the City enhance internal controls to ensure compliance with subrecipient monitoring requirements.