Finding 98125 (2022-101)

Assistance Listings number and name: 97.024 Emergency Food and Shelter National Board Program Award number and year: 0727200-056, April 1, 2021 through September 30, 2022 Federal agency: Federal Emergency Management Agency Pass-through grantor: United Way Compliance requirement: Subrecipient monitoring Questioned costs: Unknown Condition?The County?s Grants Management and Innovation Department awarded $1.6 million to 1 of 2 subrecipients during the year, or 15 percent of the Department?s $10.6 million total program expenditures, but did not perform all the required monitoring activities of the subrecipient?s activities or compliance with the award terms and program requirements. Specifically, the Department performed insufficient monitoring during the year, which consisted only of reviewing and approving the subrecipient?s invoices of program expenditures for reimbursement. However, those monitoring procedures alone were not sufficient to evaluate whether the subrecipient used program monies in accordance with the award terms and program requirements. Effect?The Department?s lack of required monitoring increased the risk that the $1.6 million of program monies the Department awarded to this subrecipient may not have been spent in accordance with the award terms and program requirements. Cause?Department management reported that it had a previous contractor relationship with the subrecipient and had not reevaluated the substance of its federal award agreement with it, as required by federal regulation, to properly identify the need to implement subrecipient monitoring procedures. Criteria?Federal regulations require the County to evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program?s requirements that the County should monitor (2 Code of Federal Regulation [CFR] ?200.331). Additionally, federal regulations require the County to monitor subrecipients, which includes required monitoring procedures for assessing the risk of each subrecipient?s noncompliance and monitoring activities based on those risk assessments; verifying single audits were conducted timely; following up on and ensuring corrective action is taken on audit findings that could potentially affect the program; and issuing a management decision for audit findings pertaining to the federal award. Those federal regulations also provide that monitoring procedures may include reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing onsite reviews, selective audits, and/or other monitoring procedures (2 CFR ?200.332[b] and [d ? e]). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that the federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The Department should: 1. Evaluate the substance of its federal award agreements with other parties to determine whether each of the other parties receiving the monies have the role of a subrecipient or contractor and whether they are required to comply with any of the federal program?s requirements that the Department should monitor. 2. Ensure it performs required monitoring of its subrecipients and their compliance with the award terms and program requirements by following its existing policies and procedures that require the Department to: a. Assess the risk of each subrecipient?s noncompliance and carry out monitoring activities based on those risk assessments such as reviewing financial and performance reports, providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Verify subrecipients receive timely single audits, follow up on and ensure that corrective action is taken on any audit findings that could potentially affect the program, and issue management decisions for any audit findings pertaining to the federal award. c. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures? results and any County actions taken, if appropriate. The County?s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.