Finding 627848 (2022-004)

2022-004 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: N/A Repeat Finding Since: N/A Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Housing and Urban Development Program: 14.231 Emergency Solutions Grant Program Award Number and Year: E-20-MW-27-0007, E-20-MC-27-0007, 2020; E-21-MC-27-0007, 2021 Pass-Through Agency: City of Saint Paul, Minnesota Criteria: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, per the Joint Powers Agreement between the County and the City of Saint Paul, the County is to submit supporting evidence for each Draw Request prepared by the County for reimbursement. Condition: The County did not obtain itemized documentation from its subrecipients for six out of 40 disbursements tested. The amount of disbursements that did not have supporting documentation totaled $507,553. Itemized documentation would include reports derived from payroll systems or subrecipient general ledgers and original receipts. Questioned Costs: Could not be determined. Context: The County expended a total of $5,500,646 of Emergency Solutions Grant Program funds in 2022. Of this amount, $5,466,366 was passed through to subrecipients of the County. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: By not obtaining itemized documentation, the County cannot be assured that its subrecipients were expending funds on allowable activities and met the requirements of allowable costs. In addition, the County is not meeting the requirements outlined in its agreement with the City of Saint Paul. Cause: The County considered its subrecipient monitoring procedures sufficient in lieu of obtaining itemized documentation. Recommendation: We recommend the County obtain itemized documentation related to expenditures, including payroll or general ledger reports and itemized receipts, as applicable, for subrecipient reimbursement requests. View of Responsible Official: Acknowledge