Report 2020-610 All Recommendation Responses
Report 2020-610: State High Risk—Federal COVID-19 Funding: Coronavirus Relief Fund (Release Date: January 2021)
Recommendation #1 To: Finance, Department of
In the event that the federal government provides California with additional funding that is similar to CRF funds and the Legislature decides to again direct such federal COVID-19 funds to local governments contingent on their adherence to certain requirements, Finance should ensure equitable treatment of local governments by proposing a method to the Legislature to provide equitable funding to counties on a per-person basis or other basis that treats counties fairly and equitably.
No additional federal funding similar to the Coronavirus Relief Funds has been provided since the last 90-day update. Finance continues to track federal legislation being considered and nothing similar is anticipated this fiscal year.
- Completion Date: July 2021
California State Auditor's Assessment of Status: Resolved
We assessed the status of this recommendation as resolved. Although the federal government has not provided federal COVID-19 funding similar to the CRF funds since we issued our report, it may in the future and Finance should implement our recommendations at that time.
- Auditee did not address all aspects of the recommendation
No additional federal funding similar to the Coronavirus Relief Funds has been provided since the last 90-day update. Finance continues to track federal legislation being considered and nothing similar is anticipated this fiscal year.
- Completion Date: July 2021
California State Auditor's Assessment of Status: Pending
We assessed the status of this recommendation as pending. Although no recent federal legislation provided additional federal COVID-19 funds, Finance may have opportunities to implement our recommendation if Congress provides additional funds and discretion to states.
- Auditee did not substantiate its claim of full implementation
No additional federal funding similar to the Coronavirus Relief Funds has been provided since the last 90-day update. Finance continues to track federal legislation being considered and nothing similar is anticipated this fiscal year.
- Completion Date: July 2021
California State Auditor's Assessment of Status: Pending
We assessed the status of this recommendation as pending. Although no recent federal legislation provided additional federal COVID-19 funds, Finance may have opportunities to implement our recommendation if Congress provides additional funds and discretion to states.
- Auditee did not address all aspects of the recommendation
The American Rescue Plan Act of 2021 includes approximately $16 billion in Local Fiscal Recovery Funds, but the funding allocation is established in the Act and the Legislature has no discretion on how those funds are allocated to local governments. The state had a ministerial role to pass through funding to small non-entitlement units of local government within 30 days of receipt. This task (unrelated to the recommendation above) was completed on July 13, 2021 when the department transmitted and the State Controller processed the disbursements to the remaining 5 cities; 286 cities received their allocation on July 13, 2021.
- Completion Date: July 2021
California State Auditor's Assessment of Status: Pending
We assessed the status of this recommendation as pending. Although the American Rescue Plan Act of 2021 provided additional federal COVID-19 funds and allocated those funds to local governments, Finance may have opportunities to implement our recommendation if Congress provides additional funds and discretion to states.
- Auditee did not substantiate its claim of full implementation
The American Rescue Plan Act of 2021 includes approximately $16 billion in Local Fiscal Recovery Funds, but the funding allocation is established in the Act and the Legislature has no discretion on how those funds are allocated to local governments.
- Completion Date: January 2021
California State Auditor's Assessment of Status: Pending
We assessed the status of this recommendation as pending. Although recent federal legislation provided additional federal COVID-19 funds and allocated those funds to local governments, Finance may have opportunities to implement our recommendation if Congress provides additional funds and discretion to states.
- Auditee did not address all aspects of the recommendation
Recommendation #2 To: Finance, Department of
In the event that the federal government provides California with additional funding that is similar to CRF funds and the Legislature decides to again direct such federal COVID-19 funds to local governments contingent on their adherence to certain requirements, Finance should ensure equitable treatment of local governments by ensuring that it or its designee uses a formal process to evaluate all cities' adherence to the Legislature's requirements, and that this evaluation is documented and retained.
No additional discretionary federal funding has been provided to states since the last 90-day update. Finance continues to track federal legislation being considered and nothing similar is anticipated this fiscal year.
- Completion Date: January 2021
California State Auditor's Assessment of Status: Resolved
We assessed the status of this recommendation as resolved. Although the federal government has not provided federal COVID-19 funding similar to the CRF funds since we issued our report, it may in the future and Finance should implement our recommendations at that time.
- Auditee did not address all aspects of the recommendation
As noted above, no additional discretionary federal funding has been provided to states since the last 90-day update. Finance continues to track federal legislation being considered and nothing similar is anticipated this fiscal year.
- Completion Date: January 2021
California State Auditor's Assessment of Status: Pending
We assessed the status of this recommendation as pending. Although no recent federal legislation provided additional federal COVID-19 funds, Finance may have opportunities to implement our recommendation if Congress provides additional funds and discretion to states.
- Auditee did not substantiate its claim of full implementation
As noted above, no additional discretionary federal funding has been provided to states since the last 90-day update. Finance continues to track federal legislation being considered and nothing similar is anticipated this fiscal year.
- Completion Date: January 2021
California State Auditor's Assessment of Status: Pending
We assessed the status of this recommendation as pending. Although no recent federal legislation provided additional federal COVID-19 funds, Finance may have opportunities to implement our recommendation if Congress provides additional funds and discretion to states.
- Auditee did not address all aspects of the recommendation
As noted above, the Legislature has no such discretion in the most recent funding provided to local government in the American Rescue Plan Act of 2021.
- Completion Date: January 2021
California State Auditor's Assessment of Status: Pending
We assessed the status of this recommendation as pending. Although the American Rescue Plan Act of 2021 provided additional federal COVID-19 funds and allocated those funds to local governments, Finance may have opportunities to implement our recommendation if Congress provides additional funds and discretion to states.
- Auditee did not substantiate its claim of full implementation
As noted above, the Legislature has no such discretion in the most recent funding provided to local government in the American Rescue Plan Act of 2021.
- Completion Date: January 2021
California State Auditor's Assessment of Status: Pending
We assessed the status of this recommendation as pending. Although recent federal legislation provided additional federal COVID-19 funds and allocated those funds to local governments, Finance may have opportunities to implement our recommendation if Congress provides additional funds and discretion to states.
- Auditee did not address all aspects of the recommendation
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.
- Completion Date: January 2022
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.
- Estimated Completion Date: 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.
- Estimated Completion Date: 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.
- Estimated Completion Date: December 31, 2021
California State Auditor's Assessment of Status: Pending
Recommendation #4 To: Finance, Department of
To follow up on any concerns Finance may have identified during its readiness reviews, it should ensure that affected state departments have taken appropriate steps to resolve those issues.
The State Auditor's recommendation was fully implemented on August 10, 2023, with the completion of the first audit that included readiness review assessment results in the engagement's audit procedures. The readiness assessment results were included as a risk factor in the statewide State Fiscal Recovery Funds (SFRF) risk assessment process and were used to assess the impact of the results on the current audit. The audit team then developed audit procedures to ensure the prior identified weaknesses had been mitigated. Finance continues to incorporate the readiness assessment results in all SFRF audits it performs when applicable.
- Completion Date: August 2023
California State Auditor's Assessment of Status: Fully Implemented
Previously, Finance demonstrated that it had incorporated the results from the readiness reviews as part of a risk-based approach to support its long-term monitoring and oversight of federal stimulus and recovery funds. Until now, Finance did not provide evidence that it had followed up with state departments. Finance provided us with a copy of the audit it completed in August 2023 and Finance demonstrated that, as part of that audit, it incorporated the readiness reviews it conducted in 2020 to follow up on any concerns they identified. We assess the status of this recommendation as fully implemented because Finance established long-term monitoring and oversight that is informed by the readiness reviews and, as part of that monitoring and oversight, conducts audits to follow up on any concerns it may have identified during the readiness reviews.
As previously mentioned, Finance's Office of State Audits and Evaluations State Fiscal Recovery Funds (SFRF) audit team incorporated the Readiness Assessment results in its audit plan. On September 6, 2022, the SFRF audit team began an audit of a SFRF program for an entity that previously received a Readiness Assessment in 2020. The draft audit report was issued today, July 10, 2023, with the expected final report issuance date in late July.
- Estimated Completion Date: August 1, 2023
California State Auditor's Assessment of Status: Pending
As previously mentioned, Finance's Office of State Audits and Evaluations State Fiscal Recovery Funds (SFRF) audit team incorporated the Readiness Assessment results in its audit plan. On September 6, 2022, the SFRF audit team began an audit of a SFRF program for an entity that previously received a Readiness Assessment in 2020. The end of fieldwork date for the engagement was March 21, 2023, with a projected draft report issuance date of early/mid-May.
- Estimated Completion Date: June 2023
California State Auditor's Assessment of Status: Pending
As previously mentioned, Finance's Office of State Audits and Evaluations State Fiscal Recovery Funds (SFRF) audit team incorporated the Readiness Assessment results in its audit plan. On September 6, 2022, the SFRF audit team began an audit of a SFRF program for an entity that previously received a Readiness Assessment in 2020. The audit team is still in the process of conducting audit fieldwork. We do not have an estimated completion date at this time.
- Estimated Completion Date: 6/30/2023
California State Auditor's Assessment of Status: Pending
As previously mentioned, Finance's Office of State Audits and Evaluations State Fiscal Recovery Funds (SFRF) audit team incorporated the Readiness Assessment results in its audit plan. On September 6, 2022, the SFRF audit team began an audit of a SFRF program for an entity that previously received a Readiness Assessment in 2020. The SFRF audit team will apply procedures to the relevant Readiness Assessment results to evaluate progress in addressing the identified risks. The audit's estimated completion date is February 2023.
- Estimated Completion Date: February 2023
California State Auditor's Assessment of Status: Pending
As mentioned in our April 14, 2022 response, Finance's Office of State Audits and Evaluations State Fiscal Recovery Funds (SFRF) audit teams are incorporating the individual Readiness Review results into its audit plan. Further, procedures were developed and were emailed to you on April 20, 2022, to address risks identified in the Readiness Reviews for specific state entities. We continue to review and plan to review state entities that received both SFRF and Coronavirus Relief Funds as well as other entities receiving SFRF funds that had more significant risk factors.
- Estimated Completion Date: 6/30/2023
California State Auditor's Assessment of Status: Partially Implemented
Based on its prior responses, Finance is incorporating the results from the readiness reviews into the statewide State Fiscal Recovery Funds risk assessment process and into its audit plan. However, Finance has not yet provided documentation to substantiate that it followed up with state departments to ensure they had taken appropriate steps to resolve issues Finance may have identified in the readiness reviews.
As mentioned in our January 19, 2022 response, to support ongoing monitoring and oversight of federal stimulus and recovery funds, the Federal Funds Accountability and Cost Tracking (FFACT) Unit and Office of State Audits and Evaluations (OSAE) performed risk assessments of the state entities that were allocated State Fiscal Recovery Funds (SFRF). Of the 20 state entities to receive SFRF, 9 entities were part of OSAE's COVID 19 Federal Funding Readiness Assessments (Readiness Assessment). As previously shared, the Readiness Assessment results were included as a risk factor in the statewide SFRF risk assessment process. Further, the SFRF audit teams are incorporating the individual Readiness Review results into its audit plan. By determining the impact of the results on the current audit, the audit team will develop audit procedures to ensure the prior identified weaknesses have been mitigated.
- Completion Date: January 2022
California State Auditor's Assessment of Status: Partially Implemented
Finance is incorporating the results from the readiness reviews into the statewide State Fiscal Recovery Funds risk assessment process and into its audit plan. However, Finance has not yet provided documentation to substantiate that it followed up with state departments to ensure they had taken appropriate steps to resolve issues Finance may have identified in the readiness reviews. Although Finance indicates that nine state entities included in the readiness reviews also received State Fiscal Recovery Funds, we found and confirmed with Finance that it is incorporating the results from the readiness reviews it conducted at six state entities that were subsequently allocated State Fiscal Recovery Funds.
- Auditee did not substantiate its claim of full implementation
- Auditee did not address all aspects of the recommendation
As part of Finance's efforts to support ongoing monitoring and oversight of federal stimulus and recovery funds, the Federal Funds Accountability and Cost Tracking (FFACT) Unit and Office of State Audits and Evaluations (OSAE) are performing risk assessments of the state entities that were allocated State Fiscal Recovery Funds (SFRF). The ongoing SFRF risk assessment focuses on the state entity's system of internal control in the areas of procurement, expenditures, reimbursement and reporting, performance goals and metrics, subrecipient monitoring, and records retention as it relates to SFRF compliance with federal laws and regulations. Among other factors, OSAE's risk assessment takes into consideration FFACT's risk assessment, the amount of federal funds awarded and projects administered, prior experience with federal funds, and the COVID 19 Federal Funding Readiness Assessments (Readiness Assessments) previously performed in July 2020. Four state entities included in the July 2020 COVID-19 Readiness Assessments also received SFRF. Those entities have been incorporated into the broader SFRF risk assessment and will be monitored for SFRF compliance accordingly. The risk assessment is an ongoing process and will continue until SFRF has been exhausted. Finance will continue to provide guidance to inform state agencies and subrecipients of reporting requirements and oversight responsibilities.
- Completion Date: September 2021
California State Auditor's Assessment of Status: Partially Implemented
Finance demonstrated through documentation that it had incorporated the results from the readiness reviews as part of a risk-based approach to support its long-term monitoring and oversight of federal stimulus and recovery funds. However, Finance did not provide evidence that it had followed up with state departments to ensure they had taken appropriate steps to resolve issues Finance may have identified in the readiness reviews. Although Finance indicates that only four state entities included in the readiness reviews also received State Fiscal Recovery Funds, we found that Finance had incorporated results from the readiness reviews it conducted at six state entities that were subsequently allocated State Fiscal Recovery Funds.
- Auditee did not substantiate its claim of full implementation
- Auditee did not address all aspects of the recommendation
As noted in our prior 90-Day Report, Finance will continue to work with all departments to address concerns identified in our oversight and coordination roll of federal stimulus funds and preparation of the annual Single Audit. Using resources included in the 2021 Budget Act, Finance is developing a risk-based approach to support ongoing monitoring and oversight of federal stimulus and recovery funds over the long-term. This framework will determine risk factors that may include Single Audit risk assessment, amount of federal funding awarded, previously performed readiness assessments, and CSA designation as high risk. This team will support a combination of proactive monitoring and periodic compliance audits. This team will also provide guidance to inform state agencies and subrecipients of reporting requirements and responsibilities and provide best practices.
- Completion Date: September 2021
California State Auditor's Assessment of Status: Partially Implemented
As part of a risk-based approach Finance is developing to support long-term monitoring and oversight of federal stimulus and recovery funds, Finance plans to use the readiness reviews it previously completed. As stated on page 8 of our report, the readiness reviews are a valuable tool to identify and mitigate risks in departments' management of COVID-19 funding. To the extent Finance identified concerns during the readiness reviews, we believe that incorporating the results from those reviews as part of its ongoing monitoring efforts will enable it to provide guidance to state agencies so they may take appropriate steps to resolve those concerns. We have assessed the status of this recommendation as partially implemented because Finance has not yet used the readiness reviews to inform its long-term monitoring and oversight efforts.
- Auditee did not address all aspects of the recommendation
Readiness reviews provided a very early assessment of the departments' activities and understanding of requirements related to federal stimulus funds and follow up on these early activities is not needed. As noted in the April report, Finance will continue to work with all departments to address concerns identified in our oversight and coordination roll of federal stimulus funds and preparation of the annual Single Audit. Finance continues to work with state departments to address any issues identified after review of the departments' monthly reports required in Budget Letter 21-03. Finance also continues to provide guidance to departments on expenditure and tracking of federal stimulus funds consistent with applicable state laws and federal requirements. Given the importance of oversight related to the unprecedented level of federal funds provided to California, the 2021 Budget Act includes funding for a new unit at the Department of Finance to continue to support the tracking and oversight of federal stimulus and recovery funds over the long-term.
- Estimated Completion Date: Ongoing
California State Auditor's Assessment of Status: Pending
We disagree with Finance's assertion that follow up on the readiness reviews it performed is not needed. As we state on page 8 of our report, the readiness reviews are a valuable tool to identify and mitigate risks in departments' management of COVID-19 funding. Finance indicates that it will continue to work with departments to address concerns identified in its oversight and coordination of federal stimulus funds and preparation of the annual Single Audit, which can identify problems after funds have been spent. Finance also states that the 2021 Budget Act included funding for a new unit at Finance to support the tracking and oversight of federal stimulus and recovery funds. We encourage Finance to use its new unit to also follow up on concerns Finance identified in the readiness reviews to ensure state departments have taken appropriate steps to resolve any issues identified in those reviews.
Readiness reviews provided a very early assessment of the departments' activities and understanding of requirements related to federal stimulus funds and follow up on these early activities is not needed. Finance will continue to work with all departments to address concerns identified in our oversight and coordination roll of federal stimulus funds and preparation of the annual Single Audit. For example, Finance issued recent guidance in Budget Letter 21-03 regarding COVID-19 tracking and reporting and is working with state departments to address any issues identified after review of the departments' monthly reports. Finance continues to provide guidance to departments on expenditure and tracking of federal stimulus funds consistent with applicable state laws and federal requirements.
- Estimated Completion Date: Ongoing
California State Auditor's Assessment of Status: Pending
We disagree with Finance's assertion that follow up on the readiness reviews it performed is not needed. As we state on page 8 of our report, the readiness reviews are a valuable tool to identify and mitigate risks in departments' management of COVID-19 funding. Finance indicates that it will work with departments to address concerns identified in its oversight and coordination of federal stimulus funds and preparation of the annual Single Audit, which can identify problems after funds have been spent. However, to the extent that its readiness reviews identified risks, Finance should monitor the respective departments to ensure they are taking appropriate steps to address those risks and correct potential problems before they have spent the majority of their COVID-19-related funding.
All Recommendations in 2020-610
Agency responses received are posted verbatim.