Finding 4209 (2023-001)

Department of Treasury Program Name: Emergency Rental Assistance Program Federal Assistance Listing Number: 21.023 Nonmaterial Noncompliance, Material Weakness – Subrecipient Monitoring Finding 2023-001 Criteria: An effective system of internal control contemplates that management properly review and assess the subrecipient through monitoring procedures and document the results of the procedures performed. This includes ensuring the subrecipient is following all direct and material compliance requirements applicable to each federal program. Condition: It was discovered while testing the program that the City did not monitor the activity of its subrecipient for the Emergency Rental Assistance Program and did not have a plan to complete monitoring for fiscal year 2023. However, the City did properly obtain and review the subrecipients single audit report for fiscal year 2022. Effect: The subrecipient could provide federal funds to ineligible individuals resulting in questioned costs that could go undetected by the City. Questioned Costs: No questioned costs were identified as a result of our procedures. Cause: The City has an overall policy on monitoring subrecipients but individual departments do not have formal policies or guidelines in place for specific monitoring plans on each of their subrecipients/programs. Recommendation: We recommend the City require, as part of their subrecipient policy, that departments have written monitoring plans for each program that utilizes subrecipients that includes, but is not limited to, an annual risk assessment of the subrecipient, timeline for monitoring (monthly, quarterly, semi-annually, annually) to take place and how it will communicate and follow up with any findings identified from the monitoring. Furthermore, management should further utilize 2 CFR 200.332 to ensure all monitoring requirements are met. Views of responsible officials: Management agrees with the finding and is implementing procedures to correct this which is further discussed in the corrective action plan. Corrective Action Plan: See Corrective Action Plan prepared by the City.