Finding 1228412 (2025-002)

Finding 2025-002 – Subrecipient Monitoring Federal Agency: Department of Treasury Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds – ALN #21.027 Condition: As part of its subrecipient monitoring process, the County obtained and reviewed the subrecipient’s audit report, which identified findings related to federal program expenditures. Although the County ultimately communicated with the subrecipient regarding the findings, requested a corrective action plan, and performed and documented follow-up procedures, these actions were not completed timely. The follow-up procedures ultimately performed did not identify any additional issues or unresolved matters. Criteria: Internal controls over subrecipient monitoring should ensure that audit findings are communicated, corrective action is requested, and follow-up procedures are completed and documented within an established timeframe. The control should also provide a means to track the status of these activities through resolution. Cause: The County did not have an effective process to track the timing of subrecipient monitoring follow-up activities and ensure that communication, corrective action requests, and related documentation were completed timely. Effect: The delay in completing and documenting follow-up reduced the timeliness and transparency of the County’s monitoring process and could have delayed corrective action by the subrecipient. The follow-up procedures ultimately performed did not identify any additional issues or unresolved matters. Repeat Finding: Yes. This finding is a continuation of Finding 2024-002. The County obtained and reviewed the required subrecipient audit reports during 2025; however, it did not timely follow up on audit findings. Recommendation: The County should establish a documented tracking process for subrecipient audit findings that identifies responsible personnel, required actions, target completion dates, and current status. The County should also require timely communication with subrecipients, requests for corrective action plans, completion of follow-up procedures, and retention of supporting documentation. Periodic supervisory review should be performed to confirm that follow-up activities are completed and documented within the established timeframe. Management’s Response: The County accepts the finding and is implementing corrective actions to address the issue and strengthen its subrecipient monitoring procedures. The Office of Innovation, Strategy and Performance is implementing a documented tracking process for subrecipient audit findings. The process will identify responsible personnel, required corrective actions, target completion dates, and the status of each item. To provide ongoing oversight, the Controller’s Office will perform quarterly reviews of this process to verify that all required monitoring activities have been completed and appropriately documented within established timeframes. The Controller’s Office, in collaboration with the Office of Innovation, Strategy and Performance, conducted a comprehensive review of all ARPA subrecipient audits submitted to the Federal Audit Clearinghouse (FAC) since the inception of the ARPA program (2021 to present). The Office of Innovation, Strategy and Performance is compiling all monitoring records, correspondence, and follow-up activities conducted to date for subrecipients with audit findings related to Assistance Listing Number (ALN) 21.027. Additional follow-up will be performed, as necessary, to verify that corrective actions have been implemented and that identified issues have been fully resolved. To strengthen ongoing monitoring efforts, the County has developed a tracking schedule that identifies each subrecipient’s fiscal year-end date. Using this schedule, the Office of Innovation, Strategy and Performance will perform quarterly reviews to monitor audit submission requirements and follow up with any subrecipient that has not submitted its audit to the FAC within the required nine-month period following its fiscal year-end. The County will incorporate a reporting question into the third-quarter 2026 Subrecipient Report requiring subrecipients to indicate whether they were subject to the Single Audit requirement in their most recent fiscal year and if so, if the audit was submitted to the FAC. The corrective actions described above will help ensure that the County’s ARPA subrecipient monitoring process is comprehensive, well documented, and performed in a timely manner. The Controller’s Office will continue to work closely with the Office of Innovation, Strategy and Performance throughout the remainder of the ARPA program to ensure the County fulfills its subrecipient monitoring responsibilities. Responsible Person(s): Fonta Reilly, Valerie Vellon Anticipated Completion Date: December 31, 2026