Finding 584383 (2023-003)

2023-003 Material Weakness over Subrecipient Monitoring Information on the federal program: Emergency Rental Assistance Program (ERAP), Assistance Listing Number 21.023, U.S. Department of Treasury Criteria: Per 2 CFR Section 200.332(b), an evaluation of each subrecipient’s risk of noncompliance for purpose of determining the appropriate subrecipient monitoring must be performed. An entity should monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with terms and conditions of the subaward, and achieves performance goals per 2 CFR Section 200.332 (d) through (f). Condition: We noted the County had one subrecipient for this program. The County did not perform or document a subrecipient risk assessment or internal control assessment for the subrecipient. Additionally, we noted no on-site visit or desk review was performed of the subrecipient during the fiscal year. Context/Cause: The County did not perform a subrecipient risk assessment or internal control assessment and therefore the requirement for an on-site visit or desk review was not determined or performed. The County did review the subrecipient invoices for services rendered and determined the invoices were allowable and within the period of performance for the ERAP. Effects: Inadequate subrecipient monitoring could lead to unallowable costs or activities, cost occurring in the wrong period of performance, individuals receiving funding that were not eligible, or incorrect quarterly report and close out reports. Recommendation: We recommend that the County create a subrecipient monitoring policy to monitor federal awards in accordance with the contract and Uniform grant guidance. The subrecipient monitoring policy should include performing a risk assessment to determine the level of subrecipient monitoring required. Additionally, we recommend the County conduct site visits and/or perform a random sampling of charges based on the results of the risk assessment. Auditee’s Response: The County acknowledges the recommendation on subrecipient monitoring. An organization-wide documented policy is being developed by the newly established Grants Management program officers. The new policy will meet current Federal guidance on subrecipient monitoring and will include resources and recommendations for County Departments to perform a risk assessment, internal control assessment, onsite visits, and desk reviews as applicable. The Housing Department will perform a program closeout monitoring for this program in the coming months.