Finding 582602 (2023-002)

U.S. Department of Health and Human Services, California Department of Social Services Federal Financial Assistance Listing/CFDA Number 93.575 Award Year 2022/23 Child Care and Development Fund Cluster Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control and Material Instance of Non-Compliance Criteria: In accordance with Title 2 U.S. Code of Federal Regulations (CFR) 200.332, pass-through entities must comply with the following: • 2 CFR 200.332(a) - Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information at 2 CFR 200.332(a)(1) through (6) at the time of the subaward and if any of those data elements change, include the changes in subsequent subaward modification. • 2 CFR 200.332(d)- 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. Pass-through entity monitoring of the subrecipient must include the information at 2 CFR 200.332(d)(1) through (4). • 2 CFR 200.332(f) – 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. Condition: The information required in accordance with 2 CFR 200.332(a)(1) through (6) was not provided at the time of the subaward. The information was provided to the subrecipients subsequent to the start date of the subaward. The Commission was responsible for the monitoring of the subrecipients to ensure that the subawards were used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. During our testing, we noted the Commission did not perform the risk assessment for 3 of 3 subrecipients. Due to the timing of the notifications of subaward to the subrecipients, the Commission was not able to verify whether subrecipients had reported the subawards within their financial statements as federal awards. Cause: During the current fiscal year, the Commission was implementing policies and procedures for subrecipient monitoring. However, the subrecipient monitoring procedures were not fully implemented as of year-end. Effect: The Commission had not fully complied with subrecipient monitoring requirements. Questioned Costs: None reported. Context: A nonstatistical sample of three (3) of three (3) subrecipients were selected for subrecipient monitoring testing. Repeat Finding from Prior Year: Yes – 2022-002 Recommendation: We recommend that the Commission adhere to their policies and procedures in accordance with 2 CFR 200.332 to ensure compliance with subrecipient monitoring requirements. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.