Finding Text
Criteria: According to ? 200.303 Internal controls of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, 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. According to ? 200.332 Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must: ? Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. ? 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. ? 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. ? Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. Condition: During our testing, it was noted that the City did not follow federal subrecipient monitoring regarding evaluating the subrecipients risk of noncompliance and performing monitoring activities which includes on-site reviews and audits, follow-up audits, review of financial and performance reports, and keeping written documentation of monitoring activities and written corrective action plans. The risk assessment of subrecipients? risk of noncompliance was done informally and without written documentation. The City did not perform any monitoring activities and management regulation on subrecipients. Auditing procedures were expanded to included testing subrecipients for allowed and unallowed activities; allowable cost and cost principles; period of performance; and procurement, suspension, and debarment. During our testing, we noted that for one subrecipient tested, documentation supporting the expenditure was missing for 3 of 63 transactions tested. Cause: The City lacks policies and procedures regarding preforming monitoring activities on subrecipients. Effect: Lack of policies and procedures did not ensure that the subrecipients of the Coronavirus State and Local Fiscal Recovery Funds were properly monitored.