East Central Council of Governments

REFERENCE NUMBER 2024-002 Subrecipient Monitoring FEDERAL AGENCY Department of Transportation FEDERAL PROGRAM Formula Grants for Rural Areas and Tribal Transit Program ALN 20.509 IDENTIFICATION AS A REPEAT FINDING No QUESTIONED COSTS None EVALUATION OF FINDING Audit finding disclosed that are required to be reported in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). CRITERIA The Uniform Guidance at 2 CFR section 200.332(c) requires ECCOG as the pass-through entity to assess the subrecipient's fraud risk and risk of noncompliance to determine the appropriate level of subrecipient monitoring. The Uniform Guidance at 2 CFR 332(e) requires the pass-through entity to review financial and performance reports and ensure the subrecipient takes appropriate corrective action. Finally, the Uniform Guidance at 2 CFR 332(f) requires the pass-through to perform additional monitoring based on its risk analysis. CONDITION ECCOG did not perform a formal risk assessment of its subrecipients. ECCOG did not document the required level of subrecipient monitoring. ECCOG did not review financial reports. One entity had a Single Audit for the year-ended December 31, 2023. ECCOG did input the subrecipient's statistics into the Colorado Department of Transportation's COTRAMS system. CONTEXT ECCOG had three subrecipients, two of which were material. This finding occurred for all three subrecipients. CAUSE ECCOG performed an informal analysis of the entities' risks. In addition, during the years-ended December 31, 2023 and 2024 reimbursement of subrecipient costs was being resolved with the Colorado Department of Transportation (CDOT). Certain 2023 costs were not reimbursed until 2024. CDOT did not agree to pay the subrecipient costs for the period March, 2024 to December 2024 until January 2025. In 2025, these entities are no longer subrecipients of ECCOG. The two significant subrecipients are now subrecipients of CDOT. EFFECT OR POTENTIAL EFFECT Failure to adequately perform and document the risk assessments on its subrecipients could result in the inadequate monitoring of the activities and performance of a subrecipient. Also, this could result in Federal awards being used by the subrecipient for unauthorized purposes. RECOMMENDATION As noted above, ECCOG no longer has any subrecipients. ECCOG should document the necessary processes for subrecipient monitoring in its grant management policies. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION See ECCOG’s corrective action plan on page 16.

Criteria Or Specific Requirement: The Uniform Guidance requires written procedures for the administration of federal financial assistance. Condition: The ECCOG has no written policies or procedures related to grant administration. Cause: The ECCOG was not aware of this requirement. Effect: Although the ECCOG has established internal and administrative controls related to grant administration, these are not documented in written policies and procedures. Questioned Costs: None Identification As A Repeat Finding: N/A Recommendation: The ECCOG should document its grant process and procedures in a formal written document. Views Of Responsible Officials And Planned Corrective Action: The ECCOG agrees with the finding and has put together a correction action plan for the finding. For additional information, see the ECCOG?s separate report for planned corrective actions.