County of MontereyLocal Government

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboaratory Capacity for Infectious Disease (ELC) Enhancing Detection; Epidemiology and Laboaratory Capacity for Infectious Disease (ELC) Enhancing Detection Expansion Assistance Listing Number: 93.323 Pass-Through Agency: California State Department of Public Health Pass-Through Number(s): COVID-19ELC27; COVID-19ELC85 Award Period: May 18, 2020 – July 31,2026 Type of Finding:  Material Weakness in Internal Control over Compliance  Other Noncompliance Criteria: The total personnel costs for time allocated to the program should be consistent with the underlying general ledger details or other detailed payroll reports. Condition: The engagement team found that the March 2024 ELC Enhancing Detection Expansion Invoice overstated payroll expenditures by reporting the entire quarter instead of just March, resulting in double-reporting. The internal controls for approving invoices before they were sent to the grantor were not adequately designed or implemented to ensure compliance with the Allowable Cost requirements of the grants. Questioned Costs: Known Actual Overstated Payroll Expenditures of $296,156. Context: CLA found the following: Six of forty payroll expenditures selected for testwork did not agree to underlying supporting documentation for the expenditures. These discrepancies were specifically noted in the payroll expenditures for March 2024. Cause: Mangement did not properly review the ELC Enhancing Detection Expansion Invoice for March 2024 for accuracy prior to submission. Effect: The County did not meet the criteria for proper grant reporting of allowable costs. Payroll expenditures charged to the program were overstated. Repeat Finding: Not a repeat finding. Recommendation: CLA recommends that the County review and update its internal controls related to the ELC grants and provide additional training to ELC staff on compliance with allowable cost and reporting requirements. Proper supervision and review should ensure accurate cost preparation for reimbursement invoices. ELC staff to provide reconciliation to ledger to support SEFA. Views of responsible officials: There is no disagreement with the audit finding.

Three of seven reports selected for testwork did not agree to underlying supporting documentation of the expenditures. One report out of seven did not have a signature and therefore there was no evidence internal control procedures occurred. Two out of seven reports selected were not submitted due to management not understanding the close out process for grant reporting.

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Provider Relief Funds Assistance Listing Number: 93.498 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2021 to June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria: Grant Compliance requires that the County submit their Provider Relief Fund (PRF) expenditures on the PRF reporting portal using key line items such as Nursing Home Infection Control Expenses, Other Provider Relief Fund Expenses, and Lost Revenues based on actual expenditures or revenues that were consistent with the terms and conditions of the grant and maintain support for those reporting line items. Condition: The County included expenditures in the required report that were not allowable per program guidance. Questioned Costs: No questioned costs noted. Context: During the testing of reports mentioned above, we noted the listing of expenditures provided by the County that was reported on the Schedule of Expenditures of Federal Awards (SEFA) did not agree to the amounts submitted to HRSA for the Period 2 submission. Cause: Management misunderstood what costs were allowable due to changes in the grant guidelines when originally submitted. Management identified the error in 2022 and has revised their submission and provided the revised submission for testing. Effect: The County was not in compliance with program reporting requirements. Repeat Finding: Not a repeat finding. Recommendation: CLA recommends that the County reach out for clarification on allowable expenditures and uses of grant funds if there is confusion. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Home Investment Partnership Program Assistance Listing Number: 14.239 Pass-Through Agency: State Department of Housing and Urban Development Pass-Through Number(s): N/A Award Period: July 1, 2020 to June 30, 2021 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Grant compliance requires that Home Investment Partnership Program loans be monitored for compliance with the loan provisions on a regular basis. Such loan requirements are required to ensure HOME loan funds are used in accordance with all program requirements. The requirements are noted in the OMB 24 CFR Part 92.500 and 92.201(b). This requirement states the participating jurisdiction ?has committed and expended HOME funds, as required, and has met HOME program requirements particularly as they relate to eligible activities, income targeting, affordability, and matching contribution requirement." Condition: The County included a loan in the Schedule of Expenditures and Federal Awards (SEFA) that was not compliant with the criteria listed above. Questioned Costs: Likely questioned costs of $68,350. Context: HOME loans must be monitored annually to ensure recipients are still living in the residence covered by the loan. CLA haphazardly selected 11 loans of a population of 85 HOME Program loans to test continuing compliance and found that one of those loans did not have adequate documentation to show continued monitoring occurred. Cause: The County had proper monitoring procedures in place; however, when a loan was discovered to be non-compliant, the procedures to remove the loan from the SEFA and County listing were not completed. Effect: The County overstated the total amount of compliant loans on the SEFA. Repeat Finding: Not a repeat finding. Recommendation: CLA recommends the County perform the write off procedures needed in a timely manner so non-compliant loans are not included in the SEFA. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number: 21.027 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2020 to June 30, 2021 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: The Office of Management and Budget (OMB) Compliance requires that funds granted through the COVID-19 Coronavirus State and Local Fiscal Recovery Fund may only be used to cover costs incurred during the period beginning on March 3, 2021 and ending on December 31, 2024. Condition: The County claimed a large number of expenses that were incurred prior to March 3, 2021. Questioned Costs: Likely questioned costs of $1,267,869. Context: CLA randomly selected a number of expenses claimed by the County within the first month of the program start date of March 3, 2021. It was found that multiple items selected were incurred prior to the allowed start date, at which point CLA worked with the County to identify all expenses incurred prior to March 3, 2021. It was found that of the original $9,713,585 claimed for the program, a total of $1,267,869 was incurred prior to the allowable start date. Cause: The County?s budget office alerted all departments of the program requirements including the start date of March 3, 2021. Departments submitted claims that had expenses that were incurred prior to stated date and those expenses were not reviewed by a second party to confirm the period of performance requirement was met. Effect: The County did not comply with the period of performance requirement for this program. Repeat Finding: Not a repeat finding. Recommendation: CLA recommends the County select a designated individual to perform a secondary review of program costs to certify claimed expenses have met all compliance requirements. Views of responsible officials: There is no disagreement with the audit finding.

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