Finding Text
Finding Reference Number: SA2022-009 Compliance with Program Expenditure Category Requirements and Reporting
AL Number: 21.027
Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
Federal Agency: Department of the Treasury
Pass Through Entity: California State Water Resources Control Board
Federal Award Identification Number: CA5710001, 219223, SLFRP3223
Criteria: The Coronavirus State and Local Fiscal Recovery Funds program limits expenditures to four broad categories. If the City makes subgrants under the Revenue Loss category, the grantor does not require that the City treat that vendor as a subrecipient, which would include subrecipient monitoring requirements. Subgrants under any of the other four categories do require compliance with subrecipient monitoring rules and regulations.
Condition: When the City provided the program expenditures breakdown for audit, expenditures for the Healthy Davis Together with the University of California Regents for program for COVID-19 testing was listed as a subgrant in under the “address negative economic impacts caused by the public health emergency” expenditure category. We also noted that the vendor was listed as a subrecipient/subgrant in the reports to the grantor. When we requested subrecipient monitoring documentation, we found that City staff had treated the vendor as a service provider and not as a subrecipient.
With assistance from the grantor, the City was able to move the fiscal year 2022 expenditures to the Revenue Loss category in July 2025.
Effect: The City was not in compliance with the subrecipient monitoring requirements, until the expenditures were moved to the Revenue Loss expenditure category, which does not require subrecipient monitoring.
Cause: City staff was not aware of the subrecipient monitoring requirement due to the situation experienced during the COVID-19 pandemic.
Recommendation: The City should ensure that expenditure categories are analyzed to understand the various requirements within each category to ensure that all compliance requirements are met at the time of the expenditure. In the event subgrants are made under a category other than Revenue Loss, the City should ensure that subrecipient monitoring procedures are completed and documented.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.