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FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Subrecipient Monitoring Audit Finding: Material Weakness Condition and Context The County received an allocation of the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) from the U.S. Department of the Treasury to support its response and recovery from the novel coronavirus. A portion of the County's allocation was then used to grant subawards to other entities (subrecipients) to carry out an eligible use. The County did not have policies and procedures in place to perform monitoring procedures of the subrecipients. The lack of internal controls was systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and 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 statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 VIGO COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County did not have adequate processes or procedures in place to ensure all required monitoring activities were conducted, as they were unaware of the requirements. Effect Due to the absence of policies and procedures to monitor the activities of subrecipients, subrecipients could have been spending federal funds for unauthorized purposes. As such, the County could not ensure proper accountability and compliance with the program requirements. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County strengthen its system of internal controls to ensure that the County verified that all subrecipients of federal awards received an audit and that the County received and reviewed the audit reports of the subrecipients. Additionally, we recommended that the County strengthen its system of internal controls to ensure that subaward agreements include all required information that should be known to the subrecipient. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.