GRANT COUNTY ECONOMIC DEVELOPMENT COUNCIL

SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2020-001 - Subrecipient Monitoring of Allowable Costs Criteria: The pass-through entity is required to monitor that the subrecipient used the subaward for authorized purposes in compliance with Federal statutes, regulations, and the terms and conditions of the subaward. The Washington State Department of Commerce, Coronavirus Relief Funds for Local Governments Program Guidelines for CARES Act Funds for Local Governments in Washington State, section 6, ineligible costs, as well as the programmatic grant agreement with Grant County, Section 2.2.02 ineligible expenses, provides that the non-allowable expenditures include payroll or benefits expense for employees whose work duties are not substantially dedicated to mitigating or responding to the COVID-19 public health emergency. Condition: During testing of the Organization?s compliance with subrecipient monitoring compliance requirements, we noted several instances where the applicant for federal funding indicated that they planned to use the funds for general payroll expenses, which are listed as an unallowable expense on the application. These applications were approved and there was no follow up with the final recipient on the use of funding or to clarify the allowable and unallowable expenses. Context: The condition occurred in 17 of the 40 samples selected for testing, which represents approximately 43% of the population. The actual costs cannot be quantified, as other allowable expenses were listed in addition to the unallowable expense. Questioned Costs: None. Cause: The condition appears to have been caused by several factors including the urgency of providing funding to those in need. It appears that the Organization did not adequately review the applications or consider the final use of federal funding. There also appears to have been over reliance on the application materials as communication of compliance requirements for the final recipient. Effect: Failure to follow-up with applicant on intent to use funding for ineligible costs, to adequately communicate the ineligible costs or to deny funding based on the stated intent creates a strong possibility of noncompliance with grant requirements by the final recipient. Recommendation: Auditors recommend that for future grant administration, management thoroughly review application materials and follow up with applicants on responses that may indicate noncompliance, as well as clearly communicating compliance requirements to final recipients upon award of funding. Management Response: Management agrees with the auditor?s findings and recommendations. The Organization is no longer administering funding under this program but will take the recommendations into consideration for any future arrangements of similar nature.