High-Risk Update—California's System for Administering Federal Recovery Act Funds:
State Departments Are Preparing to Administer Aspects of Recovery Act Funding, but Correction of Control Weaknesses and Prompt Federal and State Guidance Are Needed
HIGHLIGHTS
Our analysis of the State's applicable activities and internal controls at four state departments expected to receive significant amounts of American Recovery and Reinvestment Act of 2009 (Recovery Act) funds revealed the following:
- Some departments have made more progress than others in preparing for receiving, spending, and reporting the Recovery Act funds, but none are fully prepared.
- All four departments intend to rely on internal controls already in place for existing federal programs to administer Recovery Act funding—yet our most recent Single Audit report covering fiscal year 2007-08 identified several internal control weaknesses at all four departments.
- Some of the departments are uncertain as to whether they will be able to meet some reporting requirements while others believe they are exempt from certain reporting requirements.
- All four departments, as well as the California Federal Economic Stimulus Task Force (Task Force), have requested additional guidance from the federal government that they have yet to receive.
- The Task Force has provided some general guidance for securing and applying for funds, but needs to provide more guidance for administering Recovery Act funding.
