Audit 290602

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.