Report 2020-610 Recommendation 3 Responses

Report 2020-610: State High Risk—Federal COVID-19 Funding: Coronavirus Relief Fund (Release Date: January 2021)

Recommendation #3 To: Finance, Department of

To prevent the State from having to return CRF funds to the federal government for inappropriate expenditures, Finance should continue to implement its monitoring plan to evaluate whether selected expenditures comply with the CARES Act.

As of January 4, 2022, all cities (474) and counties (58) have provided documentation to validate reported expenditures consistent with Finance's monitoring plan. A total of 384 entities are fully reviewed and the reported costs were supported; thus no changes were needed. A total of 148 were reviewed and changes were requested consistent with federal requirements. These changes were completed and were reflected in our most recent federal report. California reported to the U.S. Treasury on January 6, 2022, that the $9.5 billion allocation, including funding to California cities and counties, was fully spent and that further adjustments are not anticipated.

California State Auditor's Assessment of Status: Fully Implemented

Finance provided documentation to substantiate that it completed its monitoring of all cities and counties as indicated in its response.

As we reported in the last 90-day update, we continue to work with city and county subrecipients to support reported expenditures through our monitoring program. As of this reporting date, all cities and counties have been contacted and asked to provide documentation to validate reported expenditures. Of these, 62 cities and counties have not responded to the request for information. Finance is contacting each entity and working through CSAC and the League of Cities to obtain necessary documentation. A total of 346 entities are fully reviewed and the reported costs were supported. An additional 94 have been reviewed and changes were requested and were completed or will be incorporated into a future cycle. Twenty (20) are in process but not yet complete. Additionally, ten comprehensive reviews, initially outlined in the draft proposed city and county monitoring plan, are now complete. Reviews will be ongoing through December 31, 2021.

California State Auditor's Assessment of Status: Partially Implemented

Finance provided documentation to support its monitoring efforts, including tracking whether the cities and counties have been responsive to Finance's requests for documents, requesting assistance from the California State Association of Counties and the League of Cities, and performing 10 comprehensive reviews of city and county expenditures. Finance continues to work with cities and counties to obtain supporting documentation and address issues identified as part of its monitoring reviews.

As we reported in April 2021, we continue to work with city and county subrecipients to support reported expenditures through our monitoring program. This data continues to be collected in stages as subrecipients complete their reports. As of this reporting date, 150 subrecipients have been contacted to provide their documentation. Of these, 40 cities have not responded to the request for information and Finance has sent a second request. Sixty (60) are fully reviewed, the reported costs were supported, and the cities and counties have been notified. After review, three cities made corrections in the Cycle 5 reporting. Additionally, eight of the ten comprehensive reviews, initially outlined in the draft proposed city and county monitoring plan, are now complete. Reviews will be ongoing through December 31, 2021.

California State Auditor's Assessment of Status: Pending

Finance has completed six of ten reviews as outlined in the draft proposed city and county monitoring plan. Subrecipients have been slow to submit detailed and follow-up data requested, which has resulted in modifications to the plan. For example, as demonstrated in the accompanying letter to local governments, we have now asked all cities and counties to collect in a single file documentation to support reported expenditures. This data will be collected in stages, the first 20 subrecipients have been contacted to provide their documentation, and additional detailed data will be collected from a randomized sample of cities and counties. Reviews will be ongoing through December 31, 2021, and we have hired two retired annuitants to further assist in this effort.

California State Auditor's Assessment of Status: Pending

All Recommendations in 2020-610

Agency responses received are posted verbatim.