Finding 11922 (2021-008)

2021-008 SUBRECIPIENT MONITORING - SIGNIFICANT DEFICIENCY Federal Program Emergency Rental Assistance ALN 21.023; passed through the County of Berks Criteria Per 2 CFR section 200.332(b), a pass-through entity must evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. This evaluation of risk may include consideration of such factors as: (1) the subrecipient’s prior experience with the same or similar awards, (2) the results of previous audits, (3) whether the subrecipient has new personnel or new or substantially changed systems, and (4) the extent and results of federal awarding agency monitoring. 2 CFR sections 200.332(d) through (f) require that the pass-through entity monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. Condition/Cause The Authority passed through funds to one subrecipient under the emergency rental assistance program in 2021. Management did not perform a risk assessment or monitoring of the subrecipient during 2021. Effect The Authority is not in compliance with the subrecipient monitoring requirements of the program during 2021. Questioned Costs Less than $25,000. Context During 2021 the Authority paid $3,815,000 in passthrough funds to one subrecipient. A risk assessment was not performed, and monitoring activities did not occur in 2021 to determine if funds were properly spent. Repeat Finding No. Recommendation We recommend that the Authority develop a procedure/internal control to ensure a risk assessment is performed for all subrecipients, as required by 2 CFR section 200.332(b). Based on this risk assessment, appropriate monitoring procedures should be performed. Management Response See corrective action plan included in this report package.