Finding 1148304 (2024-004)

Subrecipient Monitoring Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLT0790; 2021 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.332 includes requirements such as evaluating the subrecipient’s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the award. Condition: The City did not have documentation of risk assessment procedures performed for two of the four subrecipients tested. Questioned Costs: None. Context: The City of Minneapolis has documented the subaward and subrecipient procedures that its staff are expected to follow. These procedures include the completion of a pre-award risk assessment form and for the form to be maintained in the contract file of the subrecipient. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The City is not in compliance with federal regulations. Cause: City staff were not aware of the requirement to perform pre-award risk assessments with subrecipients. Recommendation: We recommend the City ensure that the City’s employees follow its procedures for completing risk assessments when contracting with subrecipients. View of Responsible Official: Concur