Coconino County

Assistance Listings number and name: 10.691 Good Neighbor Authority Award numbers and year: 22-GN-11030400-027, January 14, 2022 through January 14, 2027 Federal agency: U.S. Department of Agriculture Compliance requirements: Reporting Questioned costs: None

Condition—Contrary to federal regulations and the County’s federal award terms, the Flood Control Department (Department) failed to submit the required annual financial and performance reports for calendar year 2022 that were due on January 30, 2023.

Effect—The Department not submitting the required financial and performance reports could potentially affect future federal funding and put the federal grantor at risk of not being able to carry out its oversight responsibilities and effectively evaluate the program’s success, and prevent and detect fraud.

Cause—County management reported that the Department was aware of the program’s reporting requirements but had forgotten to complete them because the Department was focused on handling several natural disasters that were governor-declared emergencies. Further, the Department did not track its submission of reports so it was unaware that it had not submitted the missing reports.

Criteria—Federal regulations and the County’s federal award terms require it to submit annual federal financial and performance reports to the U.S. Department of Agriculture no later than 30 days after calendar year-end that contain accurate, current, and complete information (2 CFR §§200.301 and 200.302). 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 County should:

1. Require the Department to complete and submit all missing financial and performance reports to the federal agency as soon as possible. 2. Develop and implement revisions to its federal grant policies and procedures that require its departments to monitor and track when required reports are due and submitted to ensure they are completed and submitted on time.

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.

Assistance Listings number and name: 10.691 Good Neighbor Authority Award numbers and year: 22-GN-11030400-027, January 14, 2022 through January 14, 2027 Federal agency: U.S. Department of Agriculture Compliance requirements: Procurement Questioned costs: Unknown

Condition—Contrary to federal regulations and the County’s policies and procedures, the Flood Control Department (Department) failed to consider price as a selection factor when awarding a single vendor a construction services contract for which the County paid $5,896,715 during the period July 1, 2022 through June 30, 2023, which was 79.8 percent of the federal program’s expenditures. The Department evaluated the 2 bids it received but awarded the contract to the successful vendor based on its professional qualifications without considering price. Instead, the County negotiated the price of the services after the contract was awarded.

Effect—There is an increased risk that the County may have overpaid for construction services, limiting the amount of federal program monies available to carry out other program objectives. Further, the Department was unable to demonstrate whether the County could have acquired these services at a lower cost. This finding could potentially affect other federal programs that the Department administers.

Cause—County management reported that the Department’s program personnel misunderstood the County’s procurement policies and procedures for procuring services with federal monies, which require them to follow federal Uniform Guidance regulations and consider cost as a factor. They further explained that instead the Department followed Arizona Revised Statutes, which may be used for procuring construction contracts with State and local monies and does not use cost as a factor when selecting a vendor. Finally, the County did not have a designated person assigned to review all County procurements to verify compliance with federal regulations and the County’s policies.

Criteria—Federal Uniform Guidance regulations require the County to establish and follow competitive purchasing policies and procedures that align with federal Uniform Guidance procurement standards when acquiring goods and services using federal awards (2 CFR §§200.318 through 200.327). Specifically, these regulations require that the County use a written, fixed-price contract award to the lowest responsive and responsible bidder after considering factors such as discounts, transportation costs, and life cycle costs, and only architectural/engineering services can be procured without considering price as a selection factor (2 CFR §200.320). Further, the County’s policies and procedures require that the County follow Federal Uniform Guidance procurement procedures outlined in 2 CFR §§200 when making purchases with federal monies. 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. Monitor departments’ adherence to the County’s policies and procedures for purchasing goods and services using federal awards, including the departments' following Uniform Guidance 2 CFR §§200 requirements to use cost as a selection factor for awarding a construction services contract. 2. Train County departments on federal Uniform Guidance requirements and the County’s procurement policies and procedures ensuring that they understand the policies and procedures to follow when acquiring goods and services using federal awards. 3. Designate an independent person who is knowledgeable about federal requirements and the County’s procurement policies and procedures to review and approve procurements involving federal awards.

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 Program 17.278 WIOA Dislocated Worker Formula Grants Award number and year: DI21-002282, July 1, 2020 through June 30, 2025 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Earmarking Questioned costs: Unknown

Condition—Contrary to federal regulation, the County Administration Department (Department) failed to ensure that it spent no less than the required 20 percent, or $93,701, of WIOA Youth Activities monies earmarked to provide in-school and out-of-school youth with paid and unpaid work experiences for the grants award year, April 2021 through June 2023. Instead, the County spent only 15 percent, or $72,045, of the required 20 percent, and the remaining 5 percent, or $21,656, of its allocation remained unspent.

Effect—County youth did not receive $21,656 of paid and unpaid work experience services that the federal program intended. Also, the Department may have received additional monies for the federal program 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. In addition, the Department did not have policies and procedures to ensure it monitored its paid and unpaid work experience expenditures throughout the award period.

Criteria—Federal regulation requires the County 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, the Arizona Department of Economic Security, 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). 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:

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 its paid and unpaid work experiences spending throughout the award period. c. Timely communicate to the Arizona Department of Economic Security if the Department cannot meet the earmarking requirement.

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 Program 17.278 WIOA Dislocated Worker Formula Grants Award number and year: DI21-002282, July 1, 2020 through June 30, 2025 Federal agency: U.S. Department of Labor Pass-through grantor: Arizona Department of Economic Security Compliance requirement: Reporting Questioned costs: N/A

Condition—Contrary to the County’s federal award terms, the County Administrative Department (Department) failed to submit 10 of 12 monthly financial reports during the year for each of the County’s WIOA awards, for which the County reported federal award expenditures totaling $1,303,600 during the period July 1, 2022, through June 30, 2023.

Effect—The Department not submitting the required financial reports puts them at risk of not being reimbursed for allowable expenditures for the federal program and could affect whether the County receives future federal funding. In addition, the Department could put the pass-through grantor, Arizona Department of Economic Security, at risk of not being able to carry out its oversight responsibilities and effectively evaluate the program’s success and prevent and detect fraud.

Cause—County management reported that it was aware of the program’s reporting requirements, but the Department failed to complete the reports because staff lacked accounting knowledge required to complete the reports. Further, the Department did not track its federal report submissions to the Arizona Department of Economic Security, and as a result, the program supervisors were unaware that the reports were not submitted.

Criteria—The County’s federal award terms require it to submit financial reports to its pass-through grantor for each award for which services were provided. These reports include program financial information and are used by the pass-through grantor to monitor the County’s performance and compliance for the program and reimburse the County for program expenditures it incurs. Further, the federal award terms state that the County’s failure to submit accurate and complete reports by the 30th day following the end of a month could result in the County’s federal program expenditures not being reimbursed. 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 County should:

1. Follow the program’s federal award terms by: a. Requiring the Department to immediately complete and submit all missing federal financial reports to the Arizona Department of Economic Security. b. Requiring County departments to monitor and track when required reports are due and submitted to ensure they are completed accurately and submitted on time. 2. Provide training to Department staff responsible for administering the federal program on how to complete its required financial reports.

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.