Navajo County

Earmarking (Material Weakness in Internal Control and Noncompliance) Cluster name: WIOA Cluster Assistance Listings number and program name: 17.258 WIOA Adult Program 17.259 WIOA Youth Program 17.278 WIOA Dislocated Worker Formula Grants Recommendation: The County should strengthen WIOA Youth Activities program policies and procedures to ensure no less than the required 20 percent of its monies is spent to provide in-school and out-of-school youth with paid and unpaid work experience, retain qualified in-school and out-of-school youth, and consistently monitor the County's and subrecipients spending throughout the award period. Contact Person(s): Adam Garrard, WIOA Executive Director Anticipated completion date: June 30, 2026 County Discussion: Concur: The County will take corrective actions to strengthen WIOA Youth program policies, procedures, and oversight to ensure compliance with the 20 percent work experience requirement. This includes ongoing monitoring and oversight of sub-recipient expenditures, addressing barriers to work experience opportunities, and increasing engagement and enrollment of both in-school and out-of-school youth. These activities will include the following: 1) include local school counselors and administrators to support recruitment of in-school youth; 2) engage community partners with access to out-of-school youth; and 3) support outreach, enrollment, and retention strategies to attract eligible youth participants.

Matching (Significant Deficiency in Internal Control and Noncompliance) Assistance Listings number and program name: COVID-19 93.354 Public Health Emergency Recommendation: The County should establish procedures to track matching requirements in the general ledger, ensure all in-kind contributions are supported by proper documentation (e.g., timesheets), and review match compliance before use of federal funds. Contact Person(s): Catrina Jenkins, Emergency Management Manager Anticipated completion date: June 30, 2026 County Discussion: Concur: In coordination with the Arizona Department of Health Services (ADHS), the County will implement procedures to ensure matching activity is properly tracked within the general ledger. The County will also ensure that all in-kind contributions are supported by appropriate documentation, such as timesheets or other relevant supporting records, in accordance with federal grant requirements. Additionally, the County will implement a review process to verify that matching requirements are properly documented and met prior to the drawdown or use of federal funds. These measures are intended to strengthen internal controls and ensure compliance with federal grant matching requirements.

During our audit, we noted that the County charged payroll costs to federal grants based on budgeted time allocations rather than actual time spent on grant activities. The County lacked sufficient documentation to support the actual time worked on the grant program and did not perform a true-up or reconciliation process to adjust these charges to reflect the actual effort expended on the grant projects.The absence of a reconciliation process between budgeted and actual time spent on grant activities may have resulted in inaccurate charges to federal awards. This could potentially lead to questioned costs and impact the allowability of payroll expenses charged to the grants. The County’s policies and procedures did not include a process for reconciling budgeted payroll allocations to actual time spent on grant activities. Additionally, there was a lack of understanding among some department personnel regarding the requirement to base final charges on actual effort rather than budget estimates. As provided in 2 CFR §200.430(i) of the Uniform Guidance, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Payroll distribution records must reasonably reflect an employee’s total activity and support the allocation of salary or wages across specific activities. The County should strengthen its comprehensive internal control policies and procedures to ensure that payroll costs charged to federal awards are accurate, allowable, and properly supported. Additionally, the County should implement a process to reconcile the budgeted payroll allocations with actual time spent on grant activities. The County's corrective action plan at the end of this report includes the views and planned actions of its responsible officials. We are not required to audit and have not audited these responses or corrective actions and therefore we provide no assurances as to their accuracy.

The County failed to allocate 20 percent, $83,949, of the Workforce Innovation and Opportunity Act (WIOA) Youth Activities spending to provide in-school and out-of-school youth with paid and unpaid work experiences. Instead, the County spent only 13 percent, or $57,365, of the required 20 percent and spent the remaining 7 percent, or $26,584, for other youth activities. The minimum appropriation of funding was not received by County youth through paid and unpaid work experiences. The County did not properly monitor the WIOA Youth Activities monies to ensure the 20 percent earmarking requirement was met. As provided in 20 CFR §681.590 of the Uniform Guidance, grantees must not expend less than 20 percent of the WIOA Youth Activities program funding to provide eligible in-school and out-of-school youth with paid and unpaid work experiences. The County should strengthen WIOA Youth Activities program policies and procedures to ensure no less than the required 20 percent of its monies is spent to provide in-school and out-of-school youth with paid and unpaid work experience, retain qualified in-school and out-ofschool youth, and consistently monitor the County's and subrecipients spending throughout the award period. The County's corrective action plan at the end of this report includes the views and planned actions of its responsible officials. We are not required to audit and have not audited these responses or corrective actions and therefore we provide no assurances as to their accuracy.

The County failed to comply with subrecipient monitoring requirements as mandated by federal regulations and the grant terms. The County did not conduct regular oversight and monitoring of its subrecipients' programmatic and financial activities. The non-compliance with 2 CFR §200.330-332 (Subrecipient Monitoring) increases the likelihood of unallowable costs, misallocated resources, and non-compliance with program objectives. There was a change in key personnel responsible for the County's compliance with guidelines related to the federal program. Per 2 CFR §200.330-200.332, pass-through entities must monitor subrecipients to ensure compliance with federal statutes, award terms, and program objectives The County should strengthen its internal control procedures to ensure that the subaward agreement includes a clause for subrecipient monitoring activities and conduct monitoring reviews on a regular basis. The County's corrective action plan at the end of this report includes the views and planned actions of its responsible officials. We are not required to audit and have not audited these responses or corrective actions and therefore we provide no assurances as to their accuracy.

The County did not comply with the grantor's requirements for the timely submission of deliverables. Specifically, required monthly reimbursement reports and quarterly programmatic reports were submitted up to 120 days past their prescribed deadline. Failure to submit accurate and complete reports within the required timelines may result in delayed payments or retention of fund by the grantor. The delay in report submissions was attributed to a change in key personnel responsible for ensuring compliance with federal program guidelines. This transition resulted in lapses in oversight and adherence to reporting deadlines. The quarterly programmatic reports are due within 30 days after the end of each quarter. Monthly reimbursement reports should be prepared and submitted in a timely manner to avoid payment delays and minimize the risk of omitting information crucial for the reimbursement process. The County should strengthen its internal control procedures to ensure the required reports are prepared accurately and submitted within 30 days of the reporting period. The County's corrective action plan at the end of this report includes the views and planned actions of its responsible officials. We are not required to audit and have not audited these responses or corrective actions and therefore we provide no assurances as to their accuracy.

During our audit, we noted that the County charged payroll costs to federal grants based on budgeted time allocations rather than actual time spent on grant activities. The County lacked sufficient documentation to support the actual time worked on the grant program and did not perform a true-up or reconciliation process to adjust these charges to reflect the actual effort expended on the grant projects. The absence of a reconciliation process between budgeted and actual time spent on grant activities may have resulted in inaccurate charges to federal awards. This could potentially lead to questioned costs and impact the allowability of payroll expenses charged to the grants. The County’s policies and procedures did not include a process for reconciling budgeted payroll allocations to actual time spent on grant activities. Additionally, there was a lack of understanding among some department personnel regarding the requirement to base final charges on actual effort rather than budget estimates. As provided in 2 CFR §200.430(i) of the Uniform Guidance, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Payroll distribution records must reasonably reflect an employee’s total activity and support the allocation of salary or wages across specific activities. The County should strengthen its comprehensive internal control policies and procedures to ensure that payroll costs charged to federal awards are accurate, allowable, and properly supported. Additionally, the County should implement a process to reconcile the budgeted payroll allocations with actual time spent on grant activities. The County's corrective action plan at the end of this report includes the views and planned actions of its responsible officials. We are not required to audit and have not audited these responses or corrective actions and therefore we provide no assurances as to their accuracy.

Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and year: DI21-002285 A1, April 1, 2021 through June 30, 2023 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirements: Earmarking Questioned costs: $32,344 Condition—Contrary to federal regulation, the County's Workforce Innovation and Opportunity Act (WIOA) Department failed to ensure that it spent the required 20 percent, or $74,233, of WIOA Youth Activities monies earmarked to provide in-school and out-of-school youth with paid and unpaid work experiences from April 2021 through June 2023. Instead, the County spent only 11 percent, or $41,889, of the required 20 percent and spent the remaining 9 percent, or $32,344, for other youth activities, such as education and youth development. Effect—County youth did not receive $32,344 of paid and unpaid work experience services that the federal program intended. Also, the Department may have received $32,344 in federal program monies that it was not entitled to. Cause—The Department used a tracking mechanism to accurately report its paid and unpaid work experiences spending throughout the fiscal year but did not properly monitor its WIOA Youth Activities spending to ensure the 20 percent earmarking requirement was met. Although the Department had worked on developing strategies, training materials, and presentations for employers and potential participants to follow, these materials were not effectively implemented by the end of the grant award to recruit and retain qualified in-school and out-of-school youth who would benefit from paid and unpaid work experiences. Further, the Department failed to ensure it monitored its paid and unpaid work experience expenditures throughout the award period, and adjusted spending when work experience participation was lower than expected. Criteria—Federal regulation requires the Department to earmark and spend no less than 20 percent of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 Code of Federal Regulations [CFR] §681.590). Federal regulation also requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Spend no less than the required 20 percent of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences. 2. Include a process in its WIOA Youth Activities program’s policies and procedures to: a. Fully implement new strategies to recruit and retain qualified in-school and out-of-school youth who will benefit from the paid and unpaid work experience the program provides. b. Monitor both the County and its subrecipient’s paid and unpaid work experiences spending throughout the award period. c. Adjust spending to meet the earmarking requirement if work experience participation is lower than expected. 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 and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. This finding is similar to prior-year finding 2022-103 and was initially reported in fiscal year 2019.

Cluster name: Forest Service Schools and Roads Cluster Assistance Listings number and name: 10.665 Schools and Roads?Grants to States Award number and year: Not applicable Federal agency: U.S. Department of Agriculture Compliance requirements: Special tests and provisions Questioned costs: Not applicable Condition?Contrary to federal law, the County?s Public Health Services Department did not provide to its resource advisory committee and the public the required 45-day comment period on its proposal to spend its Title III monies prior to spending them. Specifically, the County spent its entire Title III award of $50,417 for wildfire education, prevention, and protection; and search, rescue, and patrol activities without submitting its proposal to its resource advisory committee. Additionally, the Department had already spent $46,506, or 92 percent, of its awarded Title III monies before it provided notice of its proposal to the public, which occurred 10 months later. Effect?Although the County spent its Title III monies for allowable uses, neither the County?s resource advisory committee nor the public had the opportunity to comment on the County?s use of the Title III monies. Cause?The Department reported that they were unaware of the federal law?s requirements and, therefore, did not have written policies and procedures to ensure that it provided its resource advisory committee and the public the required 45-day comment period prior to spending its Title III monies. Criteria?Federal law provides that the County can use Title III monies for allowable uses, such as wildfire education, prevention, and protection; and search, rescue, and patrol activities, only after the County provides a 45-day comment period on its proposed spending. Specifically, the County is required to submit its proposed use of the monies to its resource advisory committee, while also publishing in a public notice for comment, allowing 45-days for comments on its proposal before spending the monies (16 U.S.C. ?7142[b]). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The Department should: 1. Develop and implement written policies and procedures for submitting its proposal for spending Title III monies to its resource advisory committee, publishing public notice of the proposal for comment, and spending the monies on allowable uses only after the required 45-day comment period. 2. Ensure that its employees responsible for administering the program are aware of the federal law?s requirement and are trained on the Department?s policies and procedures. 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.

Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and year: DI21-002285 A1, April 1, 2020 through June 30, 2022 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirements: Activities allowed or unallowed and allowable costs/cost principles Questioned costs: $25,761 Condition?Contrary to federal regulations and grantor and County policies and procedures, the County?s Workforce Innovation and Opportunity Act (WIOA) Department (Department) spent $25,761 of WIOA program monies for unallowable purposes. Specifically, we found that the Department paid for unallowable purchases and invoices of a third-party nonprofit organization that the Department?s former director helped create while employed by the County and that the County had contracted with to increase the capacity of the local workforce system. Despite the contract between the County and the nonprofit organization not authorizing the nonprofit organization to obligate the County for its expenses or enter into agreements on the County?s behalf, both occurred. The $25,761 of unallowable purchases included: ? $25,431 for the nonprofit organization?s leased building ($18,700), electronic data services ($3,545), utilities invoices ($2,951), and a storage unit ($235). ? $260 for purchases made using County purchasing cards, consisting of gift cards, food and beverages, and board games, $245 of which were for the nonprofit organization?s program outreach activities but not allowed by the program?s requirements or the County?s purchasing card policies and procedures. ? $70 for other purchases made using County purchasing cards that the Department charged to the program but did not have documentation to support their allowability. Effect?The Department received federal reimbursement for $25,761 in unallowable charges it made to the program that it was not eligible to receive and, therefore, is at risk of having to return these monies to the pass-through grantor.1 Further, the Department made $25,761 of grant monies unavailable for their intended purpose. Cause?The County?s lack of internal controls and former WIOA director?s inadequate oversight of the WIOA program contributed to the Department?s spending of WIOA program monies for unallowable purposes. Specifically, the County?s policies and procedures did not include detailed instructions for departments to follow for initiating new vendors with the County and processing vendor invoices using its established accounts payable process through the Finance Department. This, combined with the former WIOA director?s comingling of the nonprofit organization?s financial activities, contributed to the Department directly paying for purchases and invoices belonging to the nonprofit organization despite them not being invoiced to or addressed to the County. In addition, Department staff reported that they believed the nonprofit organization?s purchases and invoices were allowable for the County to pay for and charge to the program; however, they did not maintain documentation to support this justification. Further, the former WIOA director did not provide proper oversight and ensure that the Department followed federal regulations and grantor and County policies and procedures to incur and pay for or reimburse only authorized federal program costs and to maintain documentation to support that the County?s program costs were allowable. Criteria?Federal regulations require the Department to reimburse only those federal program costs that are necessary and reasonable for the federal award?s performance, adequately documented, and allowed by the federal program?s requirements (2 CFR 200.403). The grantor and County policies and procedures contain similar requirements and also require the Department to retain records and other documentation supporting the County?s administration of federal awards for at least 3 years (Navajo County. [2019]. Fiscal Policy Manual, Section 4.4 ).2 Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The County should: 1. Improve its accounts payable policies and procedures to include detailed instructions for departments to follow for initiating new vendors with the County and processing vendor invoices using its established accounts payable process through the Finance Department. 2. Follow federal regulations and grantor and County policies and procedures requiring it to: a. Incur and pay for or reimburse only authorized federal program costs that are necessary and reasonable for the federal award?s performance, adequately documented, and allowed by the federal program?s requirements. b. Maintain documentation to support that federal program costs it incurs and pays for or reimburses are allowable. 3. Verify all invoices belong to and are addressed to the County prior to payment. 4. Ensure that the Department establishes clear contractual arrangements with entities the Department plans to use to help administer the federal program that comply with County policies and procedures and the program?s requirements. 5. Coordinate with the pass-through grantor to adjust future federal reimbursements requests or repay the pass-through grantor for the unallowable costs the Department charged to the program. 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. 1 Arizona Department of Economic Security. (n.d.). Workforce Innovation and Opportunity Act Policy Manual. Retrieved on 3/1/2023 from https://des.az.gov/services/employment/workforce-innovation-and-opportunity-act-wioa/title-i-b-policy-and-procedure 2 Federal Uniform Guidance requires the pass-through entities to follow up, issue management decisions, and resolve subrecipients single audit findings as part of their monitoring responsibilities for ensuring that subawards are used for authorized purposes, in compliance with federal laws and regulations and the award terms, and that the program?s performance goals are achieved (2 CFR ?200.332[d]).

Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and year: DI21-002285 A1, April 1, 2020 through June 30, 2022 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: $27,180 Condition?Contrary to federal regulation, the County's Workforce Innovation and Opportunity Act (WIOA) Department failed to ensure that it spent the required 20 percent, or $68,164, of WIOA Youth Activities monies earmarked to provide in-school and out-of-school youth with paid and unpaid work experiences from April 2020 through June 2022. Instead, the County spent only 11 percent, or $40,985, of the required 20 percent and spent the remaining 9 percent, or $27,180, for other youth activities, such as education and youth development. Effect?County youth did not receive $27,180 of paid and unpaid work experience services that the federal program intended. Also, the Department may have received $27,180 in federal program monies that it was not entitled to. Cause?The Department used a tracking mechanism to accurately report its paid and unpaid work experiences spending throughout the fiscal year but did not properly monitor its WIOA Youth Activities spending to ensure the 20 percent earmarking requirement was met. Further, the Department did not include in its policies and procedures a requirement for its WIOA Youth Activities program to ensure it developed an effective strategy to recruit and retain qualified in-school and out-of-school youth who would benefit from paid and unpaid work experiences, monitored its paid and unpaid work experience expenditures throughout the award period, and adjusted spending when work experience participation was lower than expected. Criteria?Federal regulation requires the Department to earmark and spend no less than 20 percent of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 Code of Federal Regulations [CFR] ?681.590). Federal regulation also requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The Department should: 1. Spend no less than the required 20 percent of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences. 2. Include a process in its WIOA Youth Activities program?s policies and procedures to: a. Develop an effective strategy to recruit and retain qualified in-school and out-of-school youth who will benefit from the paid and unpaid work experience the program provides. b. Monitor its paid and unpaid work experiences spending throughout the award period. c. Adjust spending to meet the earmarking requirement if work experience participation is lower than expected. 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. This finding is similar to prior-year finding 2021-101.

Assistance Listings number and name: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Fund Award number and years: SLFRP2144, March 3, 2021 through December 31, 2026 Federal agency: U.S. Department of Treasury Compliance requirement: Reporting Questioned costs: Not applicable Condition?Contrary to County policies and procedures, the County?s Finance Department did not review and approve all 4 federal program reports (progress reports), including 1 interim and 3 project and expenditure reports, before submitting them to the federal agency. Specifically, the Department was advanced $21,545,688 of program monies, and of this amount, the Department reported expenditures totaling $10,035,175 in progress reports as of June 30, 2022. However, the Department did not perform an independent review and approval of these required progress reports to ensure the $10,035,175 of reported expenditures was accurate, agreed to County records, and contained only allowable expenditures. Effect?Although we noted no errors on these reports, there is an increased risk that the Department may not prevent or detect and correct errors on reports it submits to the federal agency, which relies on them to effectively monitor the County?s program administration, including its compliance with program requirements and ability to prevent and detect fraud, and to evaluate the program?s success. Cause?While the Department was aware of County policies and procedures requiring it to perform an independent review and approval of the program?s reports before submitting them to the federal agency, the Department reported that it prioritized identifying allowable projects for the program and forgot to implement a process to review and approve the interim report and first 2 project and expenditure reports. Further, the Department reported that while it reviewed the third and final project and expenditure report, it did not maintain documentation of that review and approval. Criteria?The County?s policies and procedures require departments to perform an independent review and approval of all federal award transactions and reports for accuracy before submitting them to the federal agency (Navajo County. [2019]. Fiscal Policy Manual, Section 4.9). Also, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The Department should follow the County?s policies and procedures requiring it to perform and document an independent review and approval of all federal program reports before submitting them to the federal agency to ensure the reports are accurate, agree to County records, and contain only allowable expenditures. 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.

2021-101 Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and years: DI19-002204, April 1, 2019 through June 30, 2021 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirements: Earmarking Questioned costs: $41,441 Condition?The County?s Workforce Innovation and Opportunity Act (WIOA) Department failed to ensure that it spent the required 20 percent, or $73,524, of WIOA Youth Activities monies earmarked to provide in-school and out-of-school youth with paid and unpaid work experiences from April 2019 through June 2021. Instead, the County spent only 9 percent, or $32,083, of the required 20 percent and spent the remaining 11 percent, or $41,441, for other youth activities, such as education and youth development. Effect?County youth did not receive $41,441 of paid and unpaid work experience services that the federal program intended. Also, the Department may have received $41,441 in federal program monies that it was not entitled to. Cause?The Department used a tracking mechanism to accurately report its paid and unpaid work experiences spending throughout the fiscal year but did not properly monitor its WIOA Youth Activities spending to ensure the 20 percent earmarking requirement was met. Further, the Department did not include in its policies and procedures a requirement for its WIOA Youth Activities program to ensure it developed an effective strategy to recruit and retain qualified in-school and out-of-school youth who would benefit from paid and unpaid work experiences, monitored its paid and unpaid work experience expenditures throughout the award period, and adjusted spending when work experience participation was lower than expected. Criteria?Federal regulation requires the Department to earmark and spend no less than 20 percent of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences. Additionally, federal regulation also requires the Department to monitor such expenditures and report them to the pass-through grantor monthly throughout the award period to ensure it is spending the monies in a timely manner to meet the earmarking requirement (20 Code of Federal Regulations [CFR] ?681.590). Federal regulation also requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR ?200.303). Recommendations?The Department should: 1. Spend no less than the required 20 percent of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences, as required by the federal earmarking regulations. 2. Include a process in its policies and procedures for its WIOA Youth Activities program to: a. Develop an effective strategy to recruit and retain qualified in-school and out-of-school youth who will benefit from the paid and unpaid work experiences the program provides. b. Monitor its paid and unpaid work experiences spending throughout the award period. c. Adjust spending to meet the earmarking requirement if work experience participation is lower than expected. 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. This finding is similar to prior-year findings 2020-101.

2021-102 Assistance Listing number and name: 93.354 COVID-19 Public Health Emergency Response?Cooperative Agreement for Emergency Response?Public Health Crisis Response Award number and years: CTR042784, March 5, 2020?June 30, 2021 Federal agency: U.S. Department of Health and Human Services Pass-through grantor: Arizona Department of Health Services Compliance requirements: Cash management and reporting Questioned costs: None Condition?The County?s Public Health Services Department did not review for accuracy 11 of the 12 required monthly Contractor Expenditure Reports (reports) before submitting them to the pass-through grantor to ensure that they were correct, agreed to County records, and contained only allowable expenditures. The Department was reimbursed a total amount of $262,748 for this federal program. Effect?Although we noted no errors or noncompliance on these reports, there in an increased risk that the Department could submit inaccurate reports to the pass-through grantor, who relies on them to evaluate the program?s performance and make funding and programmatic decisions. Additionally, since the County relies on the reports to request reimbursement of program-related expenditures, there is an increased risk that County could receive federal monies to which it is not entitled. Cause?The Department was acting in a state of emergency response due to the COVID-19 pandemic and did not follow the County?s existing policies and procedures requiring a detailed, independent review and approval of the reports before submitting them to the pass-through grantor. Criteria?The County?s policies and procedures require departments to independently review and approve all financial transactions, including reports the County submits to grantors to request federal reimbursement of its program expenditures (Navajo County [2019]. Fiscal Policy Manual, Section 4.9). 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 follow established County policies and procedures that require a detailed, independent review and approval to be performed of the reports before submitting them to the pass-through grantor for reimbursement. 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.

Cluster name: WIOA Cluster Assistance Listings numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number and years: DI19-002204, April 1, 2018 through June 30, 2020 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirements: Earmarking, Reporting Questioned costs: $21,113 Condition?The County failed to ensure that it spent the required 20 percent, or $47,022, of WIOA Youth Activities monies earmarked to provide in-school and out-of-school youth with paid and unpaid work experiences from April 2018 through June 2020. Instead, the County spent only 11 percent, or $25,909, of the required 20 percent and spent the remaining 9 percent, or $21,113, for other youth activities, such as education and youth development. Further, the County improperly tracked and reported these expenditures to the pass-through grantor in all monthly required WIOA Youth Activities financial reports. The County erroneously reported that it spent $74,038, which is $48,129, or 65 percent, more than it actually spent in total for paid and unpaid work experiences during the award period. Effect?County youth did not receive $21,113 of paid and unpaid work experience services that the federal program intended. Also, the County submitted erroneous financial reports to the pass-through grantor and may have received $21,113 in federal program monies that it was not entitled to. Cause?The County did not oversee the Northeastern Arizona Innovative Workforce Solutions (NEAZIWS) that operates the WIOA Youth Activities programs to ensure its executive director developed an effective strategy to recruit and retain qualified in-school and out-of-school youth that would benefit from paid and unpaid work experiences, created a tracking mechanism to properly monitor and report its paid and unpaid work experience expenditures throughout the award period, and adjusted spending when work experience participation was lower than expected. Also, the County did not include a process in its policies and procedures or train its employees to prepare and review the required financial reports to ensure they did not include incorrect or unallowable costs or activities prior to submitting them to the pass-through grantor. Therefore, the submitted reports were not always independently reviewed and approved. Criteria?Federal regulation requires the County to spend no less than 20 percent of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences. The County must track and report such expenditures to the pass-through grantor monthly throughout the award period to ensure the County is spending in a timely manner to meet the earmarking requirement. (20 Code of Federal Regulations [CFR] ?681.590) Federal regulation also requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms. (2 CFR ?200.303) Recommendations?The County should: 1. Spend no less than 20 percent of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences and accurately report to the pass-through grantor whether this earmarking requirement was met by: a. Creating a tracking mechanism to properly monitor and report its paid and unpaid work experiences spending throughout the award period. b. Developing an effective strategy to recruit and retain qualified in-school and out-of-school youth who will benefit from the paid and unpaid work experiences the program provides and adjust spending to meet the earmarking requirement if work experience participation is lower than expected. 2. Include a process in its policies and procedures to review financial reports to ensure they do not include incorrect or unallowable costs or activities, including: a. Designating knowledgeable, responsible employees to prepare financial reports and separate independent employees to conduct financial report reviews and approvals prior to submitting them to the pass-through grantor. b. Training employees to prepare accurate reports and perform independent reviews and approvals of financial reports. The training should describe what should be reported, how to identify and address errors, and how to properly record their review and approval. The County?s responsible officials? views and planned corrective action are in its corrective action plan at the end of this report. This finding is similar to prior-year findings 2019-101 and 2019-102.

Cluster name: SNAP Cluster Assistance Listings number and name: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award number and years: ADHS16-106531; October 1, 2015 through September 30, 2020 Federal agency: U.S. Department of Agriculture Pass-through grantor: Arizona Department of Health Services Compliance requirements: Activities allowed or unallowed and allowable costs/cost principles Questioned costs: $5,351 Condition?Contrary to County policy and federal regulation, the County?s Public Health Services District (District) did not retain documentation needed to support $5,351 of costs charged to the federal program, and the program manager reviewed and approved 2 of her own travel claims. Specifically, we tested 43 transactions and noted the District did not: ? Retain documentation that indicated the actual number of District vehicles used and vehicle usage dates and purposes to support 2 vehicle-use charges totaling $5,295. ? Obtain an itemized receipt detailing $31 spent at Amazon with a purchasing card, which appeared to be for a phone case and screen protector in the purchasing card records. ? Require an independent review for 2 of the program manager?s 3 travel claims and associated lodging, meal, and fuel charges totaling $637. The District retained documentation to support these costs and we determined they were allowable, except for 1 purchase without an itemized receipt for $25 spent at a gas station. Effect?The District may have misspent $5,351 of federal program monies for purposes other than intended. Further, when program managers do not follow established policies, they set an unfavorable tone that policies do not need to be followed. Cause?The County did not always train employees responsible for reviewing and approving federal program purchases and vehicle-use charges to ensure employees followed County policy requirements to retain itemized receipts or other necessary supporting documentation for the claims. Further, the County did not provide adequate oversight of the program manager?s travel expenses because the County did not designate an employee, such as someone from the Finance Department or executive management level, to be responsible for performing an independent review of the program manager?s travel claims. Criteria?County policy and federal regulation require adequate documentation to support costs charged to federal awards. (2 Code of Federal Regulations [CFR] ?200.400[d]) Also, County policy requires properly approving all accounting records, and federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms. (2 CFR ?200.303) Recommendations?The County should: 1. Require employees to follow County policy, such as: a. Retaining supporting documentation, including actual number of vehicles used and vehicle usage dates for vehicle-use charges and itemized receipts for purchasing card costs that clearly support the costs charged to the federal award. b. Ensuring all accounting records are properly approved. 2. Improve its policy to: a. Provide annual training to employees who review and approve federal program purchases. The training should describe the requirement to retain documentation to support federal program purchases. Employees should document their understanding in writing. b. Designate an employee, such as someone from the Finance Department or executive management level, to be responsible for performing an independent review of the program manager?s travel claims. The County?s responsible officials? views and planned corrective action are in its corrective action plan at the end of this report.

2019-101 Cluster name: WIOA Cluster CFDA numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: Dl16-002107 April 1, 2017 through June 30, 2019; DI19-002204 April 1, 2018 through June 30, 2020 Federal agency: U.S. Department of Labor Pass-through Grantor: Arizona Department of Economic Security Compliance requirement: Reporting Questioned costs: None Condition and context?The County did not review 11 of 67 required grant program financial reports for accuracy to ensure they did not include improper, duplicate, or unallowable costs or activities prior to submitting them to the pass-through grantor. We tested 3 of those 11 reports and noted no unallowable costs or errors. Criteria?The County must establish and maintain effective internal control over its federal awards that provides reasonable assurance that it is managing them in compliance with all applicable laws, regulations, and award terms, including controls for ensuring the accuracy of its required grant program financial reports. (2 CFR ?200.303) Effect?There is an elevated risk that the County could submit erroneous financial reports to the pass-through grantor and receive federal program monies that it is not entitled to if it does not review financial reports. Cause?The County had staff turnover and did not have adequate written policies and procedures, and therefore did not require an independent review and approval of financial reports prior to its submission to the pass-through grantor. Recommendation?To help ensure that the County submits accurate grant program financial reports to the pass-through grantor and receives federal program monies for only those costs and activities that are allowable, the County should develop and implement written policies and procedures requiring an independent review and approval of its financial reports prior to submitting them to the pass-through grantor. The County?s responsible officials? views and planned corrective action are in its corrective action plan at the end of this report.

2019-102 Cluster name: WIOA Cluster CFDA numbers and names: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award numbers and years: Dl16-002107 April 1, 2017 through June 30, 2019; DI19-002204 April 1, 2018 through June 30, 2020 Federal agency: U.S. Department of Labor Pass-through Grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: $30,657 Condition and context?The County was required to spend $65,330 of WIOA Youth Activities monies it received to provide in-school and out-of-school youth with paid and unpaid work experiences. However, the County?s records indicated it fell short of this spending requirement by $30,657. Further, the County reported to the grantor that it spent $48,128 of the required $65,330 for these services but could not provide adequate supporting documentation for the total it reported. Criteria?The County must spend no less than 20 percent, which totaled $65,330 for the 2-year award ending in fiscal year 2019, of its WIOA Youth Activities monies to provide in-school and out-of-school youth with paid and unpaid work experiences. The County must track and report such expenditures to the pass-through grantor throughout the 2-year award period to ensure the County is spending in a timely manner to meet the earmarking requirement. (20 CFR ?681.590) In addition, the County must establish and maintain effective internal control over its federal awards that provides reasonable assurance that it is managing them in compliance with all applicable laws, regulations, and award terms. (2 CFR ?200.303) Effect?The County did not provide in-school and out-of-school youth with approximately $30,657 of services that the grant intended and may be required to return these monies to the grantor. Cause?The County had staff turnover and did not have adequate policies and procedures for tracking and reporting WIOA Youth Activities monies used to provide in-school and out-of-school youth with paid and unpaid work experiences to ensure the County met the WIOA Cluster?s earmarking requirement. Recommendations?To help ensure the County provides in-school and out-of-school youth with the intended services and complies with the WIOA Cluster?s earmarking requirement, the County should: ? Develop and implement policies and procedures requiring an effective and documented tracking mechanism to properly monitor and report WIOA Youth Activities monies used to provide in-school and out-of-school youth with paid and unpaid work experiences throughout the award period. ? Conduct and document a review of the earmarking percentage met throughout the award period to allow the County to adjust its spending in a timely manner to meet the earmarking requirement. ? Retain adequate supporting documentation for program expenditures the County reports to the grantor. The County?s responsible officials? views and planned corrective action are in its corrective action plan at the end of this report.

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