Finding Text
Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires pass-through entities to clearly identify to each subrecipient federal subaward information, assess risk of noncompliance for each subrecipient, monitor subrecipient activities, confirm every subrecipient has an audit under Subpart F of the Uniform Guidance (if applicable) and respond to the results of the subrecipients’ audits. Condition: Internal controls should be in place to ensure the City is in compliance with all requirements of the federal award program. The City did not properly monitor six (6) subrecipients (four (4) under Highway Planning and Construction and two (2) under the Federal Transit Formula Grants) in compliance with the Uniform Guidance. Context/Cause: The City did not have adequate internal controls to ensure compliance with subrecipient monitoring requirements. Testing was performed over each requirement for the City. Out of a total population of six (6) subrecipients across the Highway Planning and Construction program and the Federal Transit Formula Grants, all six (6) were selected for testing. For all six (6) subrecipients, the City did not perform subrecipient monitoring on any of the subrecipients for either program. Effects: Noncompliance at the subrecipient level may occur and not be detected by the City. Questioned Costs: None Recommendation: We recommend the City enhance internal controls to ensure compliance with subrecipient monitoring requirements. Auditee’s Response: Management will implement a process to ensure entities receiving grant funds from the City are properly evaluated to determine whether they are classified as contractors or subrecipients. Subrecipients will be assessed for risk and ongoing monitoring will be conducted for all subrecipients based on the results of the City’s risk assessment.