Finding 498737 (2023-003)

Finding 2023-003 Program ALN: 21.027 Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Award Number/Year: Not applicable / 2023 Federal Agency: U.S. Department of Treasury Repeat of Finding 2022-003 Criteria: The U.S. Department of Treasury issued Compliance and Reporting Guidance on February 28, 2022, which specifies the information to be reported for each contract, grant, loan, transfer or direct payment greater than $50,000 pertaining to the State and Local Fiscal Recovery Funds (SLFRF). The required information includes identification of subrecipients, which are entities that receive a subaward from a recipient to carry out the purposes (program or project) of the SLFRF award on behalf of the recipient. Subrecipient relationships require additional monitoring and compliance steps. The direct recipient (the County) is responsible for determining if an entity is considered to be a subrecipient. Condition/Context: One of the two quarterly project expenditure reports tested reported fifteen subrecipients, which does not agree to the County’s determination of the relationship with the entity or the exclusion of subrecipient payments reported in the Schedule of Expenditures of Federal Awards for SLFRF. The sample was not statistically valid. Cause: The County did not have internal controls in place requiring an independent person with an understanding of the subrecipient terminology and classification to review the report prior to submission to the US Department of Treasury. Effect: The report was submitted with subrecipient misclassifications. Questioned Costs: None noted. Recommendation: The County should review its internal control procedures to ensure there are proper review and approval processes in place over completeness and accuracy of reports before submissions to federal agencies are completed. Management's Response: The County finance and administrative team have updated the relationship categories subsequent quarterly reports.