Finding Text
Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing Number: 21.027 Federal Grantor: U.S. Department of the Treasury Award Number and Year: 2021 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: In accordance with Title 2 U.S. Code of Federal Regulations (CFR) 200.332, pass-through entities must comply with the following: • 2 CFR Part 200.332(a), Requirements for Pass-Through Entities, states that all passthrough entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award. • 2 CFR 200.332(b) – 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 listed in 2 CFR 200.332(b)(1) through (4). • 2 CFR 200.332(d)- Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include the information at 2 CFR 200.332(d)(1) through (4). • 2 CFR 200.332(f) – Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 200.501. • 2 CFR section 200.303(a), Internal Controls, states that the non-Federal entity must 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. Condition: We noted for three (3) of three (3) subrecipients selected for testwork, the City did not perform any of the required subrecipient monitoring procedures as required under 2 CFR 200.332 (a. through i.). As a result, we were unable to perform audit procedures over Subrecipient Monitoring compliance requirements. Cause: The City did not have adequate policies and procedures in place to monitor subrecipient in accordance with 2 CFR 200.332. Effect: The City did not have procedures in place requiring compliance with the Subrecipient Monitoring requirements in 2 CFR 200.332 and as such did not comply with subrecipient monitoring requirements related to the program. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of three (3) of three (3) subrecipients were sampled. Repeat Finding from Prior Year: No. Recommendation: The City should implement policies and procedures to ensure that subrecipients are properly identified at the time of award and accurately reported on the SEFA. Additionally, the City should establish and perform ongoing subrecipient monitoring procedures in accordance with Federal requirements, including risk assessments and documentation of monitoring activities. Views of Responsible Officials and Planned Corrective Action: Management agrees. See separately issued Corrective Action Plan.