Finding Text
The County had inadequate controls for ensuring compliance with federal subrecipient monitoring requirements.
Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
Federal Grantor Name: U.S. Department of Treasury
Federal Award/Contract Number: 1505-0271
Pass-through Entity Name: Washington State Department of Commerce
Pass-through Award/Contract Number: 21-4619C-129
Known Questioned Cost Amount: $0
Prior Year Audit Finding: Yes, Finding 2022-001
Description of Condition
The purpose of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to provide direct payment to states, U.S. territories, tribal governments, metropolitan cities, counties and non-entitlement units of local government through states. The County received an award from the Washington State Department of Commerce
for its Eviction Rent Assistance Program (ERAP) 2.0, funded by SLFRF. ERAP is intended to prevent evictions that would contribute to the spread of COVID-19 by paying past-due, due and future rent to those with the greatest needs while distributing funds equitably. During fiscal year 2023, the County spent $5,745,978 of its ERAP award from Commerce. Of this amount, the County passed through $2,889,539 to one subrecipient to administer the program.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
When the County passes federal funding onto subrecipients, federal regulations require it to monitor subrecipients to ensure they comply with the federal award’s terms and conditions. For awards dependent on household eligibility, monitoring would include verifying the subrecipients only assisted households that met
program eligibility requirements. The amount of verification would depend on each subrecipient’s noncompliance risk.
Our audit found the County did not monitor its subrecipient as federal regulations require. Specifically, the County did not perform monitoring procedures to ensure the assisted households were eligible.
We consider this internal controls deficiency to be a material weakness that led to material noncompliance.
Cause of Condition
Although the County received a similar finding for this program in March 2023 for the 2021 audit, County staff did not dedicate the time and resources to monitor the subrecipient in fiscal year 2023 to ensure assisted households were eligible.
Effect of Condition
The County did not monitor the subrecipient to ensure it complied with the subaward’s terms and conditions and appropriately used federal program funds. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance.
Recommendation
We recommend the County monitor its subrecipients to ensure they comply with the terms and conditions of their federal subawards, including providing funds only to eligible program households.
County’s Response
In response to the finding and consistent with WWDCH's commitment to compliance with applicable laws, rules, regulations, and award terms and conditions, WWDCH obtained training regarding subrecipient monitoring
requirements and best practices regarding implementation of the same. In addition, WWDCH established a monitoring program for ERAP 2.0, which included testing of a sample of 25 applications for compliance with programmatic and financial requirements. Testing of the 25 sampled applications is complete; however, final reporting and resolution of monitoring observations are still in_x0002_process. WWDCH anticipates completion of this corrective action to occur during FY25.
Auditor’s Remarks
We appreciate the County's commitment to resolving this finding. We will review the corrective action taken during our next regular audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass through entities, establishes the requirements for subrecipient monitoring and management requirements for pass-through entities.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.