Finding Text
2023-009 – Subrecipient Monitoring – Internal Control and Compliance over Subrecipient Monitoring Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-21-1-05M/5262, ADEL-23-2-05Z/3679 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR 200.403 Factors affecting allowability of costs (g), the costs to be allowable must be adequately documented. Furthermore, pursuant to 2 CFR 200.332 Requirements for pass-through entities, the entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: a. Review financial and performance reports. b. Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. c. Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. d. Resolve audit findings specifically related to the subaward. Condition: For the fiscal year ended June 30, 2023, the City was unable to provide the complete and accurate documentation for the subrecipient-related expenditures which include the reimbursement package and proof of cash receipts. In relation to project ADEL-21-1-05M/5262, the reported $14,020 subrecipient’s personnel-related expenditure was lifted from the monthly status of expenditures monitoring file with $14,067 verified as grant amount. It was noted that the expenditures were incurred through June 30, 2022, and the related reimbursements were received through June 30, 2023. The audit team vouched the supporting remittance advices provided and identified only $4,720 related to the project. The remaining amount of $9,300 was unverified. As for project ADEL-23-2-05Z/3679, no support related to fiscal year 2023 was received, therefore, the reported amount of $18,253 could not be verified. Cause: The City did not have sufficient subrecipient monitoring policy and record-keeping requirements established. Effect or Potential Effect: Due to the insufficient documentation provided, the auditor was unable to verify the amounts reported related to the City’s subrecipients, resulting in questioned costs and findings of non-compliance. Questioned Costs: $27,553. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend the City enhance its subrecipient monitoring activities and establish a formal record-keeping policy to ensure complete and timely documentation of expenditures. Views of Responsible Officials: Management concurs with the finding.