Pima CountyLocal Government

FEDERAL AWARD FINDING: 2025-101 The County did not develop internal control procedures over program reporting and cash management requirements, increasing risk of report errors to awarding agencies and wrongly receiving monies Cluster name: Workforce Innovation and Opportunity Act (WIOA) Cluster Assistance Listings number(s) and name(s): 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Worker Formula Grants Award number(s) and year(s): IGA DI23-002389 July 1, 2023 through June 28, 2028 IGA DI21-002286 July 1, 2024 through June 30, 2025 Federal agency: U.S. Department of Labor Pass-through grantor(s): Arizona Department of Economic Security Compliance requirement(s): Reporting Questioned costs: Not applicable Assistance Listings number(s) and name(s): 21.027 COVID-19—Coronavirus State and Local Fiscal Recovery Funds Award number(s) and year(s): 1505-0271 March 3, 2021 through December 31, 2024 CT-FM-22-149 October 1, 2024 through September 30, 2025 SLFRFP1962 January 5, 2023 through December 31, 2026 CTR069300 January 1, 2024 through December 30, 2026 GTAW-FM-23*123 October 3, 2022 through July 3, 2026 ACJC-VC-25-001A July 1, 2024 through December 31, 2024 Federal agency: U.S. Department of the Treasury Pass-through grantor(s): Stratford Art Works; Arizona Supreme Court; Arizona Housing Coalition, Inc.; Arizona Criminal Justice Commission Compliance requirement(s): Reporting Questioned costs: Not applicable Assistance Listings number(s) and name(s): 93.268 Immunization Cooperative Agreements Award number(s) and year(s): CTR062571 July 1, 2022 through June 30, 2025 CTR059891 July 1, 2022 through June 30, 2027 Federal agency: U.S. Department of Health & Human Services Pass-through grantor(s): Arizona Department of Health Services Compliance requirement(s): Cash management and reporting Questioned costs: Not applicable Condition Contrary to federal regulation, the County’s Grants Management and Innovation Department (Department) did not develop, document, or implement internal control procedures to monitor compliance with the programs’ reporting and/or cash management requirements for the Workforce Innovation and Opportunity Act (WIOA) Cluster, Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, and Immunization Cooperative Agreements (ICA) programs. Specifically, for 13 of 17 reports we tested, we found the Department did not perform an independent review and approval of reports prior to submitting them to the federal agency or pass-through grantor to ensure the reported expenditures were accurate, agreed to the County’s records, and contained only allowable expenditures for: • 9 of 9 WIOA monthly reconciliation reports we tested. • 3 of 4 SLFRF quarterly project and expenditure reports we tested. • 1 of 4 ICA quarterly contract expenditure reports (CER) we tested. These reports are also used to request reimbursement from the federal agency. For the same 3 SLFRF reports identified above and submitted during fiscal year 2025, we found the Department did not retain documentation, such as system reports, screenshots, or queries, to support the information it reported. Despite lacking internal control procedures, we did not identify inaccurate program information for WIOA and ICA reported to the federal agency or pass-through grantor, and we did not identify any ICA costs incurred prior to requesting reimbursement. In addition, the Department did not prepare and submit timely ICA program information to the federal agency for monitoring. Specifically, for award CTR062571—the Immunization Bridge Access program, the Department failed to submit 3 quarterly CERs by their required due dates in fiscal year 2025 and instead, on August 2, 2025, submitted 1 report that contained information covering all quarterly information for fiscal year 2025. Effect Without effective internal control procedures in place, there is an increased risk that the Department may not prevent or detect and correct errors on reports it submits to federal agency and pass-through agencies, which rely on them to effectively monitor the program administration, including its compliance with program requirements, ability to prevent and detect fraud, and to evaluate the programs’ success. There is also an increased risk that the Department could receive federal monies to which it is not entitled. Further, the Department is at risk that this finding applies to other federal programs it administers. Cause The Department’s management reported that it had sometimes performed independent reviews and approvals of reports but did not maintain documentation of these independent reviews because the Department did not have a formal policy requiring a documented review and approval of its reports. In addition, the Department’s management reported that policies and procedures were not followed to retain documentation for the SLFRF reports. Further, the Department’s management reported it did not have a process to track when each ICA report was required to be completed and did not verify that reports were submitted by the designated due dates. Criteria 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). This would include developing, documenting, and implementing internal control procedures to monitor compliance with federal agency guidelines requiring the Department to report accurate and complete information for the WIOA monthly reconciliation reports, SLFRF quarterly financial reports, and ICA quarterly contract expenditure reports. Also, federal regulation and Department retention policies require the Department to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334). Further, federal regulation requires the Department to submit financial reports as required by the federal award. Reports submitted quarterly are due no later than 30 calendar days after the reporting period (2 CFR §200.328). Recommendations to the Department 1. Perform and document an independent review and approval of federal program reports before submitting the reports to the federal agency to ensure the reported expenditures were accurate, agreed to the County’s records, and contained only allowable expenditures. 2. Retain detailed documentation, such as system reports, screenshots, or queries related to submitted reports to ensure accurate and complete program information is reported to the federal agency or pass-through grantor for each federal program. 3. Submit ICA reports by their quarterly due dates. 4. Follow its retention policies and procedures and federal regulation requirements to retain all records relating to a federal award for a period of 3 years from the date of its submission of the reports. Develop, document, and implement policies and procedures to monitor compliance with the programs’ reporting requirements to: 5. Perform and document an independent review and approval of federal program reports before submitting the reports to the federal agency or pass-through grantor to ensure reports are accurate, agree to County records, and contain only allowable expenditures for the applicable fiscal year. 6. Create a tracking mechanism to ensure reports are completed and submitted by their due dates. This finding is similar to prior-year finding 2024-104 that was initially reported in fiscal year 2024. Views of responsible officials County management concurs with this finding. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials regarding these recommendations. 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: Workforce Innovation and Opportunity Act (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 numbers and years: DI21-002286, April 1, 2022 through June 30, 2024; Alert 23-001, July 1, 2023 through June 30, 2024; Alert 23-003, July 1, 2023 through June 30, 2024; Alert 24-002, July 1, 2023 through May 31, 2024 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Questioned costs: N/A Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Pass-through grantors: Arizona Criminal Justice Commission, City of Tucson, Arizona Housing Coalition, and Arizona Department of Public Safety Questioned costs: N/A Assistance Listings number and name: 97.024 COVID-19 - Emergency Food and Shelter National Board Program Award numbers and years: 027200-048, November 1, 2021 through December 30, 2024; 027200-056, April 1, 2023 through February 29, 2024; 23*115, March 1, 2023 through February 29, 2024; 23*154, April 1, 2023 through February 29, 2024 Federal agency: U.S. Department of Homeland Security Pass-through grantor: United Way EFSP Questioned costs: $347,345 Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Questioned costs: N/A Compliance requirement: Subrecipient monitoring Total questioned costs: $347,345 Condition—The County’s Grants Management and Innovation Department (Department) awarded over $29 million to 27 subrecipients during fiscal year 2024, or 29% of the County’s total federal expenditures for the federal programs shown in Table 1 below, but did not perform all the required monitoring of its subrecipients’ activities or compliance with award terms and program requirements. Table 1 Summary of subrecipients by federal program Fiscal year 2024 Federal program name Subrecipient information Total number Number tested Total awards Total federal expenditures Subrecipient awards as a percentage of total federal expenditures Workforce Innovation and Opportunity Act (WIOA) Cluster 4 4 $ 568,095 $12,253,972 4.6% Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 17 7 17,241,445 56,862,338 30.3% Emergency Food and Shelter National Board Program (EFS) 4 4 7,810,673 22,622,229 34.5% Shelter and Services Program (SSP) 2 2 3,560,449 8,172,063 43.5% Total 27 17 $29,180,662 $99,910,602 29.2% While the Department performed some monitoring procedures during the year, those procedures were not sufficient to evaluate its subrecipients’ use of program monies in accordance with the award terms, program requirements, and federal regulations. Specifically, contrary to federal regulations, the Department did not perform the following required monitoring procedures: • Perform monitoring activities based on risk assessments performed—The Department did not perform monitoring activities based on risk assessments performed. Specifically, the Department’s risk assessment procedures identified 7 high-risk and 4 moderate-risk subrecipients, but it did not modify its monitoring activities to address the risks identified. Additional monitoring activities could include providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures like reviewing the subrecipient’s policies and procedures obtained to ensure the subrecipients complied with award terms, program requirements, and federal regulations. • Document monitoring procedures, results, and actions taken—For 4 of 4 WIOA subrecipients, 7 of 7 SLFRF subrecipients, 3 of 4 EFS subrecipients, and 1 of 2 SSP subrecipients we tested, while the Department completed and maintained a checklist of subrecipient monitoring procedures, it did not document monitoring results or Department actions taken for these subrecipients based on the checklist results. • Verify subrecipient single audits were conducted timely—The Department did not verify whether 1 of its 4 WIOA subrecipients had a single audit performed. Effect—The Department’s failure to perform required monitoring contributed to $347,345 of misspent EFS program monies that the Department may be required to return to the federal agency in accordance with federal requirements.1 Specifically, the Department’s not reviewing subrecipient procurement policies and procedures aided in allowing 1 EFS subrecipient to render services for which conflicts of interest existed. Specifically, the EFS subrecipient, Catholic Community Services (CCS), began having laundry services provided by a vendor, Amado Laundry, in April 2023, for which it then self-reported to the County a conflict-of-interest violation in May 2024. This violation was a result of a CCS employee forming a vendor relationship with Amado Laundry, which was owned by the employee’s mother. After the Department’s management was made aware of the conflict of interest, they performed monitoring procedures over CCS and identified noncompliance with federal procurement guidelines totaling $347,345, including determining that Amado Laundry charged a rate double the average rates charged by competitors. The County issued a management letter to CCS on September 27, 2024, communicating a conflict-of-interest finding and a procurement standards finding. The conflict-of-interest finding required CCS to develop new, written procurement-related conflict-of-interest procedures in compliance with federal regulations and to create and maintain an ongoing training program related to these federally compliant conflict-of-interest procedures for employees. Further, there is an increased risk that $29 million of program monies the Department awarded to subrecipients may not be spent in accordance with the award terms, program requirements, and federal regulations. If monies are spent inconsistent with program requirements, those who intended to benefit from the program may not receive all the services or other benefits they otherwise would have received. Also, the Department’s not verifying subrecipient single audits were conducted may result in the Department’s not following up on and ensuring corrective action is taken on audit findings that could potentially affect the program and/or issue management decisions for audit findings pertaining to the federal award. Finally, the County is at risk that this finding applies to other federal programs it administers. Cause—The Department’s management reported that they did not always follow County policies and procedures and only performed limited procedures because their subrecipient monitoring policies and procedures were outdated, the number of subrecipients increased significantly during the fiscal year, and they did not have sufficient staff to monitor all subrecipients. The Department’s management also reported that it prioritized transitioning to a new enterprise resource planning (ERP) system rather than monitoring all subrecipients. Further, the County’s policies lacked requirements to perform monitoring activities based on risk assessments performed and to review subrecipients’ policies and procedures to ensure the subrecipients complied with award terms, program requirements, and federal regulations. Criteria—Federal regulation requires the County to monitor subrecipients, which includes required monitoring procedures for (2 CFR §200.332): • Assessing the risk of each subrecipient’s noncompliance and performing monitoring activities based on those risk assessments, such as providing training or technical assistance on program-related matters and performing on-site reviews, selective audits, and/or other monitoring procedures. • Reviewing financial and performance reports. • Verifying single audits were conducted timely. • Following up on and ensuring corrective action is taken on audit findings that could potentially affect the program. • Issuing a management decision for audit findings pertaining to the federal award. In addition, County policies require the County to: • Assess subrecipient risk and establish a monitoring plan and perform monitoring procedures at least every 2 years, including verification of internal controls.2,3 • Review the Federal Audit Clearinghouse at least quarterly to review subrecipient single audits and issue management decision letters, as necessary.2 • Maintain documentation of monitoring procedures, including the monitoring procedure’s results and any Department actions taken.3 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 to the County— 1. Perform required monitoring of its subrecipients and their compliance with the award terms, program requirements, and federal regulations. 2. Follow its established policies and procedures for performing and documenting monitoring reviews of subrecipients to: a. Maintain documentation of monitoring procedures demonstrating they were performed, including the monitoring procedures’ results and any Department actions taken, if appropriate. b. Verify subrecipients receive timely single audits, follow up on and ensure that corrective action is taken on audit findings that could potentially affect the program, and issue management decisions for audit findings pertaining to the federal award. 3. Update its policies and procedures to include: a. A process to determine the appropriate monitoring activities to perform based on subrecipient risk assessments performed, such as providing training or technical assistance on program-related matters, and performing on-site reviews, selective audits, and/or other monitoring procedures. b. Review subrecipients’ policies and procedures, including procurement processes, to ensure the subrecipients complied with award terms, program requirements, and federal regulations. 4. Prioritize and allocate sufficient resources, such as staffing, to comply with the award terms, program requirements, federal regulations, and its updated policies, and designate an individual(s) to perform necessary subrecipient-monitoring procedures. 5. Work with U.S. Department of Homeland Security to determine if it will require the Department to reimburse $347,345 in questioned costs. 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 2022-101 and was initially reported in fiscal year 2022. 1 Federal Uniform Guidance requires federal awarding agencies to follow up on audit findings and issue a management decision to ensure the recipient takes appropriate and timely corrective action (2 CFR §200.513[c]). Further, it requires that federal awarding agencies’ management decisions clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action, as directed by the federal awarding agencies (2 CFR §200.521). 2 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-04: Subrecipient Risk Assessment / Management Decisions. 3 Pima County. (2018, June). Grants Management & Innovation Policy number GMI-28: Subrecipient Monitoring.

Assistance Listings number and name: 21.032 COVID-19 - Local and Tribal Consistency Fund Award number and year: 1505-0276, October 20, 2022 through March 31, 2023 Federal agency: U.S. Department of the Treasury Assistance Listings number and name: 97.141 Shelter and Services Program Award number and year: 24*039, March 1, 2023 through September 30, 2025 Federal agency: U.S. Department of Homeland Security Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal regulation, the County’s Grants Management and Innovation Department (Department) did not develop, document, or implement internal control procedures to monitor compliance with the programs’ reporting requirements. Specifically, for 5 of 7 federal program reports we tested, the Department did not perform an independent review and approval of reports prior to submitting them to the federal grantor to ensure the reported expenditures were accurate, agreed to the County’s records, and contained only allowable expenses, as follows: • 1 annual obligation and expenditure report for the Local and Tribal Consistency Fund (LTCF) totaling $7,924,031. • 3 quarterly financial reports and 3 quarterly performance reports for the Shelter and Services Program (SSP) totaling $3,092,423. Despite lacking internal control procedures, we did not identify inaccurate program information reported to the federal agency. Effect—Without effective internal control procedures in place, there is an increased risk that the Department may not prevent or detect and correct errors on reports it submits to federal agencies, which rely on them to effectively monitor the program administration, including its compliance with program requirements and ability to prevent and detect fraud, and to evaluate the programs’ success. Further, the Department is at risk that this finding applies to other federal programs it administers. For instance, in finding 2024-104, we found errors in its reports for the Emergency Rental Assistance Program and Coronavirus State and Local Fiscal Recovery Funds federal programs the Department also administers. Cause—The Department’s management reported that it had performed independent reviews and approvals of all reports but did not maintain documentation of these independent reviews because the Department did not have a formal policy requiring a documented review and approval of its reports. Criteria—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). This would include developing, documenting, and implementing internal control procedures to monitor compliance with federal agency guidelines requiring the Department to report accurate and complete information for the LTCF annual obligation and expenditure report and SSP quarterly financial and performance reports.1,2 Recommendations to the Department—The Department should develop, document, and implement policies and procedures, and train responsible employees, to monitor compliance with the programs’ reporting requirements, including processes to perform and document an independent review and approval of all federal program reports before submitting them to the federal agency to ensure 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. 1 U.S. Department of the Treasury. [2022, September]. Reporting Guidance for the Local Assistance and Tribal Consistency Fund. Retrieved 4/7/2025 from https://home.treasury.gov/system/files/136/LATCF-Reporting-Guidance.pdf. 2 U.S. Department of Homeland Security. [2023, June]. The Department of Homeland Security (DHS) Notice of Funding Opportunity (NOFO) Fiscal Year 2023 Shelter and Services Program.

Assistance Listings number and name: 21.023 COVID-19 - Emergency Rental Assistance Program Award numbers and years: 1505-0270, May 5, 2021 through September 30, 2025; 23*019, May 5, 2021 through September 30, 2025; 23*056, May 5, 2021 through September 30, 2025; 23*064, May 5, 2021 through September 30, 2025 Assistance Listings number and name: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award numbers and years: 1505-0271, March 3, 2021 through December 31, 2024; 19418, May 31, 2023 through September 30, 2023 Federal agency: U.S. Department of the Treasury Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal regulation and guidance, for information it reported to the federal agency for its Emergency Rental Assistance (ERA) Program and Coronavirus State and Local Fiscal Recovery Funds (SLFRF) programs, the County’s Grants Management and Innovation Department (Department) did not retain documentation to support 8 reports we tested and did not always report accurate information or required elements. Specifically, we found that the Department: • Did not retain documentation for 4 ERA and 4 SLFRF reports—The Department did not retain documentation, like system reports, screenshots, or queries, to support the information it reported for 4 ERA and 4 SLFRF quarterly reports we tested.1 • Did not accurately report information for 4 SLFRF reports—The Department incorrectly reported information for the 4 SLFRF quarterly reports specified in the previous bullet. Specifically, the Department understated cumulative program expenditures by nearly $14.6 million, or 10% of total cumulative program expenditures, as of June 30, 2024. • Failed to report required elements for 2 ERA reports—The Department did not report all key performance and financial reporting data points required by the federal agency in 2 of 4 ERA quarterly reports we tested, thereby limiting the amount of data we could audit. Specifically, the Department did not submit: o Demographic information for the ERA2 – Q2 2023 report due August 16, 2023. o Any performance or financial reporting data for the ERA2 – Q3 2023 report due November 15, 2023. As of June 30, 2024, the County spent $77.6 million, or 99% of the nearly $77.7 million of ERA program monies, and $147.1 million, or 72% of the over $203.4 million of SLFRF program monies, advanced in fiscal year 2021. Effect—The Department’s failure to report required elements and accurate program information in its reports and to retain associated documentation for audit purposes resulted in us being unable to determine whether the reports were complete and accurate. Also, it results in the federal agency being unable to rely on the reports to monitor the Department’s program administration, including its compliance with program requirements and ability to prevent and detect fraud, and to evaluate the program’s success. Further, the Department is unable to resubmit reports because the federal agency does not allow grantees to revise reports after the reporting period has closed.2,4 Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—As described in finding 2024-103, the Department did not develop, document, or implement internal control procedures to monitor compliance with the programs’ reporting requirements. Specifically, the Department did not perform an independent review and approval of reports prior to submitting them to the federal grantor to ensure the reported expenditures were accurate, agreed to the County’s records, and contained only allowable expenses. Department management reported that it had performed independent reviews and approvals of all reports but did not maintain documentation because the Department did not have a formal policy requiring a documented review and approval of its reports. Further, the Department did not have a process to track when each report was required to be completed and did not verify that reports were submitted by the designated due dates. Additionally, Department management reported that it had significant staff turnover between fiscal years, resulting in current staff being unaware of how past reports were prepared and what supporting documentation was used. Further, Department management reported that there were many challenges in using the U.S. Department of the Treasury’s portal, including the inability to make changes to submitted reports after the reporting period ended. Criteria—Federal agency guidance requires the Department to report accurate and complete information for the ERA and SLFRF quarterly reports.3,4 Also, federal regulation and Department retention policies require the Department to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report (2 CFR §200.334).5 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 to the Department— 1. Prepare and retain detailed documentation, such as system reports, screenshots, or queries, to ensure accurate and complete program information is reported to the federal agency for each federal program. 2. Follow its retention policies and procedures and federal regulation requirements to retain all records relating to a federal award for a period of 3 years from the date of its submission of the final expenditure report. 3. Develop, document, and implement policies and procedures and train responsible employees to monitor compliance with the program’s reporting requirements, including processes to: a. Reconcile expenditure amounts reported to the County’s accounting records and investigate and resolve any differences prior to submitting the reports to the federal agencies. b. Perform and document an independent review and approval of all federal program reports before submitting them to the federal agency to ensure reports are accurate, agree to County records, and contain only allowable expenditures. c. Create a tracking mechanism to ensure reports are completed and submitted by the designated due dates. 4. Work with the U.S. Department of the Treasury to determine if it will require and allow the Department to adjust and resubmit previously submitted reports to correct detected errors and/or missing information. 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 The Department did not retain documentation for the following ERA quarterly reports: ERA2 - Q2 2023, Q3 2023, Q4 2023, and Q1 2024. Further, the Department did not retain documentation for the following SLFRF quarterly Project and Expenditure Reports: April 1, 2023 through June 30, 2023; July 1, 2023 through September 30, 2023; October 1, 2023 through December 31, 2023; and January 1, 2024 through March 31, 2024. 2 On April 2, 2024, the U.S. Department of the Treasury updated its ERA2 Treasury Portal User Guide, which indicates that the grantee can only resubmit a report before the reporting deadline. (U.S. Department of the Treasury. [2024, April]. Emergency Rental Assistance Program [ERA2] Treasury Portal User Guide, Version 3.0. Retrieved 4/7/2025 from https://home.treasury.gov/system/files/136/ERA2-Portal-Users-Guide.pdf). 3 The U.S. Department of the Treasury requires the Department to submit accurate and complete ERA quarterly reports of cumulative programmatic and financial information covering the period from receipt of awards to the end of the current quarterly reporting period (U.S. Department of the Treasury. [2024, September]. Emergency Rental Assistance Program [ERA2] Reporting Guidance, Version 3.0. Retrieved 4/7/2025 from https://home.treasury.gov/system/files/136/ERA2-Reporting-Guidance.pdf). 4 On April 7, 2023, the U.S. Department of the Treasury updated its Project and Expenditure Report User Guide State and Local Fiscal Recovery Funds, which indicates that the grantee can only resubmit a report before the reporting deadline. Further, the U.S. Department of the Treasury requires the Department to submit accurate and complete SLFRF quarterly project and expenditure reports that provide information on projects funded, expenditures, and contracts and subawards greater than or equal to $50,000, and other information required from recipients. (U.S. Department of the Treasury. [2023, April]. Project and Expenditure Report User Guide State and Local Fiscal Recovery Funds, Version 2. Retrieved 4/7/2025 from https://home.treasury.gov/system/files/136/ERA2-Reporting-Guidance.pdf). 5 Pima County’s record retention schedule requires federal grant records to be retained after quarterly, annual, or final expenditure reports are submitted and approved or after funding agency requirements are met, whichever is longer (Pima County. [2023, December]. Pima County Record Retention Schedule).

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.

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