Finding 395877 (2023-007)

Criteria: 2 CFR section 200.331(f) requires that pass-through entities verify that subrecipients expected to be audited are taking timely and appropriate action on deficiencies detected through audits. Condition: Internal controls should be in place to ensure the City is in compliance with all requirements of the federal award program. For the fiscal year ended June 30, 2023, the City did not verify whether the subrecipients of grant funds were required to be audited, as required by 2 CFR section 200.33 (f). Context/Cause: The City did not have adequate internal controls to ensure compliance with all subrecipient monitoring requirements. Testing was performed to determine whether the City verified if the three (3) subrecipients of grant funds were required to be audited for the fiscal year ended June 30, 2023. Effect: Noncompliance at the subrecipient level may occur due to the subrecipient not being aware of all of the grant’s requirements. The City will be unable to effectively monitor the subrecipient if the City is unaware of whether the subrecipient is required to be audited. Recommendation: We recommend the City enhances internal controls to ensure compliance with subrecipient monitoring requirements. Auditee’s Response: We agree with the finding and will ensure controls are put in place to adequately monitor all subrecipient monitoring requirements.