SAGUACHE COUNTY

Finding 2025-003: Local Assistance and Tribal Consistency Fund, Assistance Listing No. 21.032, U.S. Department of Treasury Compliance Requirement: Reporting Grant No.: Not applicable Type of Finding: Internal Control (material weakness) and Compliance (material noncompliance) Criteria: The Reporting Guidance for the Local Assistance and Tribal Consistency Fund (LATCF) requires the recipients to submit an annual Obligation and Expenditure Report. The report must include aggregate obligations and expenditures by governmental purpose reporting category which should agree to the County LATCF grant expenditures reported in the financial statements within 10 percent. Condition: The County did not submit the required annual LATCF report by the due date. In addition, the County reported total cumulative expenditures of $1,312,124 on the annual LATCF report submitted in 2026; however, the general ledger support indicated total cumulative expenditures should have been reported as $1,240,405. Cause: The County did not accurately reconcile the LATCF revenues and expenditures in the financial statements as of December 31, 2025. Effect: The cumulative expenditure amount on the annual LATCF report was overstated by $71,719. Recommendation: The County should continue to strengthen its internal controls over federal reporting, including reconciliation and review procedures, to ensure LATCF reports are submitted timely and accurately in accordance with LATCF Reporting requirements.

Finding 2025-004: Temporary Assistance for Needy Families, Assistance Listing No. 93.558, U.S. Department of Health and Human Services Passed through Colorado Department of Human Services Compliance Requirement: Activities Allowed and Unallowed, Allowable Costs/Cost Principles, Eligibility Grant No.: Not applicable Type of Finding: Internal Control (material weakness) and Compliance (material noncompliance) Criteria: Temporary Assistance for Needy Families (TANF) funds must be used for activities consistent with the purposes and requirements of the TANF program (45 CFR 263.11). The County is responsible for maintaining sufficient documentation to demonstrate that TANF-funded services are provided to eligible participants or otherwise qualify as allowable TANF activities under applicable federal and state requirements and the terms and conditions of the award. Condition: The County was unable to provide sufficient supporting documentation to verify that services provided under the contract were delivered to TANF-eligible children and families or otherwise met TANF program eligibility and allowability requirements. Cause: The County did not have adequate procedures to obtain, review, and retain documentation supporting the allowability of TANF-funded contract costs. In addition, contract monitoring did not ensure the contractor maintained and submitted documentation demonstrating that services charged to TANF were provided to TANF-eligible children and families. Questioned Costs: Questioned costs of $88,100 were identified for TANF funds paid to a contractor under the contract. Effect: The County could not demonstrate that TANF-funded contract services met TANF eligibility and allowability requirements due to insufficient documentation. Recommendation: The County should strengthen internal controls over TANF-funded contracts to ensure costs charged to TANF are allowable and adequately supported. The County should establish and enforce contractor documentation requirements and contract terms sufficient to demonstrate TANF eligibility and allowable services, implement monitoring procedures to verify support before payment or reimbursement, and retain required records in accordance with applicable retention requirements.

Finding 2025-005: Temporary Assistance for Needy Families, Assistance Listing No. 93.558, U.S. Department of Health and Human Services Passed through Colorado Department of Human Services Compliance Requirement: Special Tests and Provisions Grant No.: Not applicable Type of Finding: Internal Control (material weakness) and Compliance (noncompliance) Criteria: The work provisions of the Colorado State Plan for Temporary Assistance for Needy Families (TANF) require that all applications for Colorado Works are assessed no later than 30 days after the application date and that roadmaps are completed no later than 30 days after the assessment date. In addition, the County must reduce or terminate the amount of assistance payable to the family, subject to any good cause or other exceptions, if an individual refuses to engage in work as required in 45 CFR 261.16. Context: We examined 6 of an average of 23 total case files for basic cash assistance with $84,629 in total expenditures. Condition: We identified 4 exceptions affecting 2 of the 6 case files tested. The exceptions consisted of the following: • One initial assessment was not completed within 30 days of the initial application. The assessment was completed 158 days late. • Two participant roadmaps were not completed and were not included in the applicable case files. • One case file did not include documentation that the County monitored the progress of a work-eligible individual to ensure the individual was engaging in work or preparing to engage in work in compliance with the Penalty for Refusal to Work special tests and provision compliance requirement. Benefits were terminated in February 2025 for not engaging in work activities; however, the individual received benefits from July 2024 through January 2025 with no documentation that the County was monitoring progress or sanctioning benefits. Cause: The County had insufficient monitoring and review procedures to ensure required case management documents were completed, reviewed, and retained in the case files within required timeframes. Questioned Costs: None. Effect: The County is not in compliance with the provisions of the Colorado State Plan for TANF as it relates to initial assessments and roadmaps. Recommendation: The County should strengthen internal controls over TANF case file monitoring and documentation to ensure initial assessments and roadmaps are completed and reviewed within the required 30-day timeframes in compliance with federal special tests and provisions requirements. Management should implement supervisory review or other monitoring controls to verify that work-eligible participant progress is monitored and documented and that sanctions or benefit terminations are applied and documented timely in accordance with the Penalty for Refusal to Work special tests and provisions compliance requirement.

Finding 2023-001: Local Assistance and Tribal Consistency Fund, Federal Assistance Listing No. 21.032, U.S. Department of Treasury Compliance Requirement: Reporting Grant No.: Not applicable Type of finding: Internal Control (material weakness) and Compliance (material noncompliance) Criteria: The Reporting Guidance for the Local Assistance and Tribal Consistency Fund (LATCF) requires the County as the recipient to submit an Obligation and Expenditure Report annually. This report should include aggregate obligations and expenditures by governmental purpose reporting category which should match County LATCF grant expenditures reported in the financial statements within 10 percent. Condition: The County omitted $397,560 of current period LATCF obligations and expenditures which is greater than 10% difference on the annual 2023 Obligation and Expenditure Report. Cause: The County does not have a complete system of internal controls that provides for the review of the Obligation and Expenditure Report. Questioned Costs: None Effect: The Obligation and Expenditure Report contained errors and was not in compliance with the financial reporting requirements of the Reporting Guidance. Recommendation: The County should strengthen its internal controls with adopted policies and procedures to ensure accurate financial reporting in compliance with the Reporting Guidance for the Local Assistance and Tribal Consistency Fund. Grantee’s Response: See corrective action plan.