Finding 1182409 (2025-006)

Federal program: AL 21.027, COVID-19 Coronavirus State and Local Fiscal Recovery Funds; Federal agency: U.S. Department of Treasury; Award year: 2025; Criteria: Per the 2025 Office of Management and Budget (OMB) Compliance Supplement, part 4, requirement M, Subrecipient Monitoring, pass-through entities are required to perform monitoring of their subrecipients. This is further described in Uniform Guidance 2 CFR 200.332 which states "A pass-through entity must...(e) 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 passthrough 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: (1) Review financial and performance reports, (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the passthrough entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the passthrough entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward...".; Condition: Evidence was not retained of monitoring subrecipients’ financial and single audit reporting or of any follow up actions as a result of monitoring.; Cause: The cause appears to be attributable to a lack of consistently applied procedures for retention of data files supporting the performance of subrecipient monitoring. If the review was performed, it was retained within the employee’s emails and not through use of an ARPA/SLFRF shared folder. The employee performing the review is no longer with the County and the review documentation could not be located. It is undeterminable if this monitoring was performed.; Effect or potential effect: Without adequate review of the subrecipient’s financial and single audit reporting related to program expenditures incurred, the control environment, compliance with laws, regulations, and program requirements, errors or misappropriation of assets could exist without the County's knowledge.; Questioned costs: No known or estimated questioned costs identified.; Context: Out of a population of 14 subrecipients, six were selected for testing for which no evidence was retained indicating the County’s review of financial and single audit reporting of the subrecipients.; Repeat finding: No.; Recommendation: The County should develop and implement policies and procedures to ensure that all subrecipient monitoring is performed and retained.; Views of responsible officials: The County understands and concurs with the finding.