Finding 1123821 (2024-002)

Reference Number: 2024-002 Prior Year Finding: 2023-007 Federal Agency: U.S. Department of Treasury Federal Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: 2021 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Controls over Compliance, Other Matters Criteria or Specific Requirement: Compliance - 2 CFR Section 200.332 – Requirements for Pass-Through Entities states in part, that all pass-through entities must: (a) Verify that every subrecipient is audited as required by Subpart F – Audit Requirements of this part when it is expected that the subrecipient’s Federal award expended during the respective fiscal year equaled or exceeded the threshold set forth in section 200.501 Audit requirements. Control - Per 2 CDF 200.303(a), a non-Federal entity must: Establish a maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statues, regulations, and the terms and conditions of the federal awards. These internal controls should comply 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). Condition: The County was not able to provide documentation to show it ensured its subrecipients were audited as required by 2 CFR Part 200 Subpart F – Audit Requirements (Subpart F). Context: Exceptions were noted for 7 of 7 subrecipients selected for testing: • The County was unable to provide support that it ensured the subrecipient was audited as required by Subpart F. The County could not produce evidence of verification that the subrecipient’s Federal awards expended during the fiscal year were below the threshold set forth in section 200.501 Audit Requirements. Cause: The County did not establish effective internal controls and procedures over subrecipient monitoring. Effect: Without ensuring subrecipients have obtained audits as required by Subpart F, there is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple years, and these discrepancies may not be properly monitored, detected, and corrected by the County personnel on a timely basis. Questioned Costs: Undetermined. Recommendation: The County should review and enhance internal controls and procedures to ensure that evaluation of independent audits is performed. Views of Responsible Officials: The County agrees with this finding. See separate Correction Action Plan related to this finding.