Audit 309209

Walla Walla County January 1, 2022 through December 31, 2022 2022-001       The County had inadequate controls for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-129   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-005       Description of Condition The purpose of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to provide direct payment to states, U.S. territories, tribal governments, metropolitan cities, counties and non-entitlement units of local government through states. The County received an award from the Washington State Department of Commerce for its Eviction Rent Assistance Program (ERAP) 2.0, funded by SLFRF. ERAP is intended to prevent evictions that would contribute to the spread of COVID-19 by paying past due, current due and future rent to those with the greatest needs while distributing funds equitably. During fiscal year 2022, the County spent $6,534,010 of its ERAP award from Commerce. Of this amount, the County passed through $2,854,117 to one subrecipient to administer the program. 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. When the County passes federal funding onto subrecipients, federal regulations require the County to monitor subrecipients to ensure they comply with the terms and conditions of the federal award. For awards dependent on household eligibility, monitoring would include verifying the subrecipients only assisted households that met program eligibility requirements. The amount of verification would depend on each subrecipient’s noncompliance risk. Our audit found the County did not monitor its subrecipient as federal regulations require. Specifically, the County did not obtain documentation from the subrecipient to ensure the assisted households were eligible. We consider this internal controls deficiency to be a material weakness that led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, monitoring was not performed to ensure assisted households were eligible and thus the County did not comply with federal regulations. Effect of Condition The County did not monitor the subrecipient to ensure it complied with the terms and conditions of the subaward and appropriately used federal program funds. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance. Recommendation We recommend the County monitor its subrecipients to ensure they comply with the terms and conditions of their federal subawards, including providing funds only to eligible program households. County’s Response We appreciate the auditor's assessment, analysis, and recommendations.  However, we disagree with the conclusion reached and the finding.  The auditor, during oral conversation discussing context, indicated the quantity of program beneficiaries reviewed for eligibility did not reach the auditor's expected quantity for adequate monitoring.  As a management team, we assessed risk and determined the level of appropriate monitoring to consist of: 1) financial monitoring through review of reimbursement requests, which contained eligibility information necessary for oversight; 2) execution of regularly scheduled status and reporting meetings wherein we obtained ongoing programmatic data; and 3) review of audit reports, where applicable.  We note neither our award agreement nor applicable federal regulations require a specific quantity of files to be reviewed as part of subrecipient monitoring.  Accordingly, we do not concur with the presence of a finding.  In addition, no instances of ineligible beneficiaries were identified by the auditor such that a material weakness classification does not appear reasonable or appropriate.   That being said, we will assess our procedures and add greater clarity to help better tell this story going forward.  We will also consider whether testing a specific number of beneficiaries is necessary and may be conducted efficiently.  Auditor’s Remarks We reaffirm our audit finding. Our work is performed in accordance with federal regulations and governmental auditing standards. We will review the correction 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. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass through entities, establishes the requirements for subrecipient monitoring and management requirements for pass-through entities. 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.

Walla Walla County January 1, 2022 through December 31, 2022 2022-001       The County had inadequate controls for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-129   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-005       Description of Condition The purpose of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to provide direct payment to states, U.S. territories, tribal governments, metropolitan cities, counties and non-entitlement units of local government through states. The County received an award from the Washington State Department of Commerce for its Eviction Rent Assistance Program (ERAP) 2.0, funded by SLFRF. ERAP is intended to prevent evictions that would contribute to the spread of COVID-19 by paying past due, current due and future rent to those with the greatest needs while distributing funds equitably. During fiscal year 2022, the County spent $6,534,010 of its ERAP award from Commerce. Of this amount, the County passed through $2,854,117 to one subrecipient to administer the program. 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. When the County passes federal funding onto subrecipients, federal regulations require the County to monitor subrecipients to ensure they comply with the terms and conditions of the federal award. For awards dependent on household eligibility, monitoring would include verifying the subrecipients only assisted households that met program eligibility requirements. The amount of verification would depend on each subrecipient’s noncompliance risk. Our audit found the County did not monitor its subrecipient as federal regulations require. Specifically, the County did not obtain documentation from the subrecipient to ensure the assisted households were eligible. We consider this internal controls deficiency to be a material weakness that led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, monitoring was not performed to ensure assisted households were eligible and thus the County did not comply with federal regulations. Effect of Condition The County did not monitor the subrecipient to ensure it complied with the terms and conditions of the subaward and appropriately used federal program funds. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance. Recommendation We recommend the County monitor its subrecipients to ensure they comply with the terms and conditions of their federal subawards, including providing funds only to eligible program households. County’s Response We appreciate the auditor's assessment, analysis, and recommendations.  However, we disagree with the conclusion reached and the finding.  The auditor, during oral conversation discussing context, indicated the quantity of program beneficiaries reviewed for eligibility did not reach the auditor's expected quantity for adequate monitoring.  As a management team, we assessed risk and determined the level of appropriate monitoring to consist of: 1) financial monitoring through review of reimbursement requests, which contained eligibility information necessary for oversight; 2) execution of regularly scheduled status and reporting meetings wherein we obtained ongoing programmatic data; and 3) review of audit reports, where applicable.  We note neither our award agreement nor applicable federal regulations require a specific quantity of files to be reviewed as part of subrecipient monitoring.  Accordingly, we do not concur with the presence of a finding.  In addition, no instances of ineligible beneficiaries were identified by the auditor such that a material weakness classification does not appear reasonable or appropriate.   That being said, we will assess our procedures and add greater clarity to help better tell this story going forward.  We will also consider whether testing a specific number of beneficiaries is necessary and may be conducted efficiently.  Auditor’s Remarks We reaffirm our audit finding. Our work is performed in accordance with federal regulations and governmental auditing standards. We will review the correction 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. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass through entities, establishes the requirements for subrecipient monitoring and management requirements for pass-through entities. 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.

Walla Walla County January 1, 2022 through December 31, 2022 2022-002       The County had inadequate controls for ensuring compliance with suspension and debarment requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-004       Description of Condition During fiscal year 2022, the County spent a total of $6.53 million in federal funding under the Coronavirus State and Local Fiscal Recovery Funds program. Of this amount, the County used $3.68 million to provide government services to the extent that the COVID-19 pandemic caused a reduction in revenue collected in its most recent fiscal year. The County awarded the remaining $2.85 million to a subrecipient to provide emergency rental assistance. 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 requirements prohibit program recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded. The County may verify this by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration's System for Award Management at sam.gov. The County must perform this verification before entering into the contract or purchasing from contractors. Additionally, the County must keep documentation demonstrating compliance with this federal requirement. Our audit found the County did not have effective internal controls for verifying the suspension and debarment status of contractors before entering into contracts with or purchasing from them. Specifically, the County did not verify that seven contractors it paid $25,000 or more during fiscal year 2022 were not suspended or debarred. We consider this control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, it did not verify contractors were not suspended or debarred and thus did not comply with federal regulations. Effect of Condition The County did not verify whether seven contractors were suspended or debarred before entering into contracts with or purchasing from them. The County paid these contractors $6,554,795 during fiscal year 2022. Without adequate internal controls, the County cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. The County subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the County improve its internal controls to ensure it verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts or purchasing from them. County’s Response Noted, the County will work with the departments responsible for administering federal funds to create procedures requiring the review of the System Of Award Management (SAM) for suspended or debarred parties in accordance with Federal Regulation. We agree with the auditor's comments and the county recognizes the challenges with staffing, training, onboarding, and managing unforeseen large amounts of federal funds coming into the county during COVID response. The county will be utilizing a contractor to assist in establishing policies, procedures, training, and strategic improvements to allow quick onboarding of staff in policies, procedures and regulations outlined by CRF 200 for future emergency federal funding and routine federal funding. Walla Walla County is committed to the importance of managing federal funding. Auditor’s Remarks   We appreciate the County's commitment to resolving this finding. 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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement) establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.

Walla Walla County January 1, 2022 through December 31, 2022 2022-002       The County had inadequate controls for ensuring compliance with suspension and debarment requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-004       Description of Condition During fiscal year 2022, the County spent a total of $6.53 million in federal funding under the Coronavirus State and Local Fiscal Recovery Funds program. Of this amount, the County used $3.68 million to provide government services to the extent that the COVID-19 pandemic caused a reduction in revenue collected in its most recent fiscal year. The County awarded the remaining $2.85 million to a subrecipient to provide emergency rental assistance. 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 requirements prohibit program recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded. The County may verify this by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration's System for Award Management at sam.gov. The County must perform this verification before entering into the contract or purchasing from contractors. Additionally, the County must keep documentation demonstrating compliance with this federal requirement. Our audit found the County did not have effective internal controls for verifying the suspension and debarment status of contractors before entering into contracts with or purchasing from them. Specifically, the County did not verify that seven contractors it paid $25,000 or more during fiscal year 2022 were not suspended or debarred. We consider this control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, it did not verify contractors were not suspended or debarred and thus did not comply with federal regulations. Effect of Condition The County did not verify whether seven contractors were suspended or debarred before entering into contracts with or purchasing from them. The County paid these contractors $6,554,795 during fiscal year 2022. Without adequate internal controls, the County cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. The County subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the County improve its internal controls to ensure it verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts or purchasing from them. County’s Response Noted, the County will work with the departments responsible for administering federal funds to create procedures requiring the review of the System Of Award Management (SAM) for suspended or debarred parties in accordance with Federal Regulation. We agree with the auditor's comments and the county recognizes the challenges with staffing, training, onboarding, and managing unforeseen large amounts of federal funds coming into the county during COVID response. The county will be utilizing a contractor to assist in establishing policies, procedures, training, and strategic improvements to allow quick onboarding of staff in policies, procedures and regulations outlined by CRF 200 for future emergency federal funding and routine federal funding. Walla Walla County is committed to the importance of managing federal funding. Auditor’s Remarks   We appreciate the County's commitment to resolving this finding. 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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement) establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.

Walla Walla County January 1, 2022 through December 31, 2022 2022-001       The County had inadequate controls for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-129   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-005       Description of Condition The purpose of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to provide direct payment to states, U.S. territories, tribal governments, metropolitan cities, counties and non-entitlement units of local government through states. The County received an award from the Washington State Department of Commerce for its Eviction Rent Assistance Program (ERAP) 2.0, funded by SLFRF. ERAP is intended to prevent evictions that would contribute to the spread of COVID-19 by paying past due, current due and future rent to those with the greatest needs while distributing funds equitably. During fiscal year 2022, the County spent $6,534,010 of its ERAP award from Commerce. Of this amount, the County passed through $2,854,117 to one subrecipient to administer the program. 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. When the County passes federal funding onto subrecipients, federal regulations require the County to monitor subrecipients to ensure they comply with the terms and conditions of the federal award. For awards dependent on household eligibility, monitoring would include verifying the subrecipients only assisted households that met program eligibility requirements. The amount of verification would depend on each subrecipient’s noncompliance risk. Our audit found the County did not monitor its subrecipient as federal regulations require. Specifically, the County did not obtain documentation from the subrecipient to ensure the assisted households were eligible. We consider this internal controls deficiency to be a material weakness that led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, monitoring was not performed to ensure assisted households were eligible and thus the County did not comply with federal regulations. Effect of Condition The County did not monitor the subrecipient to ensure it complied with the terms and conditions of the subaward and appropriately used federal program funds. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance. Recommendation We recommend the County monitor its subrecipients to ensure they comply with the terms and conditions of their federal subawards, including providing funds only to eligible program households. County’s Response We appreciate the auditor's assessment, analysis, and recommendations.  However, we disagree with the conclusion reached and the finding.  The auditor, during oral conversation discussing context, indicated the quantity of program beneficiaries reviewed for eligibility did not reach the auditor's expected quantity for adequate monitoring.  As a management team, we assessed risk and determined the level of appropriate monitoring to consist of: 1) financial monitoring through review of reimbursement requests, which contained eligibility information necessary for oversight; 2) execution of regularly scheduled status and reporting meetings wherein we obtained ongoing programmatic data; and 3) review of audit reports, where applicable.  We note neither our award agreement nor applicable federal regulations require a specific quantity of files to be reviewed as part of subrecipient monitoring.  Accordingly, we do not concur with the presence of a finding.  In addition, no instances of ineligible beneficiaries were identified by the auditor such that a material weakness classification does not appear reasonable or appropriate.   That being said, we will assess our procedures and add greater clarity to help better tell this story going forward.  We will also consider whether testing a specific number of beneficiaries is necessary and may be conducted efficiently.  Auditor’s Remarks We reaffirm our audit finding. Our work is performed in accordance with federal regulations and governmental auditing standards. We will review the correction 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. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass through entities, establishes the requirements for subrecipient monitoring and management requirements for pass-through entities. 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.

Walla Walla County January 1, 2022 through December 31, 2022 2022-001       The County had inadequate controls for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-129   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-005       Description of Condition The purpose of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to provide direct payment to states, U.S. territories, tribal governments, metropolitan cities, counties and non-entitlement units of local government through states. The County received an award from the Washington State Department of Commerce for its Eviction Rent Assistance Program (ERAP) 2.0, funded by SLFRF. ERAP is intended to prevent evictions that would contribute to the spread of COVID-19 by paying past due, current due and future rent to those with the greatest needs while distributing funds equitably. During fiscal year 2022, the County spent $6,534,010 of its ERAP award from Commerce. Of this amount, the County passed through $2,854,117 to one subrecipient to administer the program. 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. When the County passes federal funding onto subrecipients, federal regulations require the County to monitor subrecipients to ensure they comply with the terms and conditions of the federal award. For awards dependent on household eligibility, monitoring would include verifying the subrecipients only assisted households that met program eligibility requirements. The amount of verification would depend on each subrecipient’s noncompliance risk. Our audit found the County did not monitor its subrecipient as federal regulations require. Specifically, the County did not obtain documentation from the subrecipient to ensure the assisted households were eligible. We consider this internal controls deficiency to be a material weakness that led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, monitoring was not performed to ensure assisted households were eligible and thus the County did not comply with federal regulations. Effect of Condition The County did not monitor the subrecipient to ensure it complied with the terms and conditions of the subaward and appropriately used federal program funds. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance. Recommendation We recommend the County monitor its subrecipients to ensure they comply with the terms and conditions of their federal subawards, including providing funds only to eligible program households. County’s Response We appreciate the auditor's assessment, analysis, and recommendations.  However, we disagree with the conclusion reached and the finding.  The auditor, during oral conversation discussing context, indicated the quantity of program beneficiaries reviewed for eligibility did not reach the auditor's expected quantity for adequate monitoring.  As a management team, we assessed risk and determined the level of appropriate monitoring to consist of: 1) financial monitoring through review of reimbursement requests, which contained eligibility information necessary for oversight; 2) execution of regularly scheduled status and reporting meetings wherein we obtained ongoing programmatic data; and 3) review of audit reports, where applicable.  We note neither our award agreement nor applicable federal regulations require a specific quantity of files to be reviewed as part of subrecipient monitoring.  Accordingly, we do not concur with the presence of a finding.  In addition, no instances of ineligible beneficiaries were identified by the auditor such that a material weakness classification does not appear reasonable or appropriate.   That being said, we will assess our procedures and add greater clarity to help better tell this story going forward.  We will also consider whether testing a specific number of beneficiaries is necessary and may be conducted efficiently.  Auditor’s Remarks We reaffirm our audit finding. Our work is performed in accordance with federal regulations and governmental auditing standards. We will review the correction 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. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass through entities, establishes the requirements for subrecipient monitoring and management requirements for pass-through entities. 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.

Walla Walla County January 1, 2022 through December 31, 2022 2022-002       The County had inadequate controls for ensuring compliance with suspension and debarment requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-004       Description of Condition During fiscal year 2022, the County spent a total of $6.53 million in federal funding under the Coronavirus State and Local Fiscal Recovery Funds program. Of this amount, the County used $3.68 million to provide government services to the extent that the COVID-19 pandemic caused a reduction in revenue collected in its most recent fiscal year. The County awarded the remaining $2.85 million to a subrecipient to provide emergency rental assistance. 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 requirements prohibit program recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded. The County may verify this by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration's System for Award Management at sam.gov. The County must perform this verification before entering into the contract or purchasing from contractors. Additionally, the County must keep documentation demonstrating compliance with this federal requirement. Our audit found the County did not have effective internal controls for verifying the suspension and debarment status of contractors before entering into contracts with or purchasing from them. Specifically, the County did not verify that seven contractors it paid $25,000 or more during fiscal year 2022 were not suspended or debarred. We consider this control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, it did not verify contractors were not suspended or debarred and thus did not comply with federal regulations. Effect of Condition The County did not verify whether seven contractors were suspended or debarred before entering into contracts with or purchasing from them. The County paid these contractors $6,554,795 during fiscal year 2022. Without adequate internal controls, the County cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. The County subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the County improve its internal controls to ensure it verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts or purchasing from them. County’s Response Noted, the County will work with the departments responsible for administering federal funds to create procedures requiring the review of the System Of Award Management (SAM) for suspended or debarred parties in accordance with Federal Regulation. We agree with the auditor's comments and the county recognizes the challenges with staffing, training, onboarding, and managing unforeseen large amounts of federal funds coming into the county during COVID response. The county will be utilizing a contractor to assist in establishing policies, procedures, training, and strategic improvements to allow quick onboarding of staff in policies, procedures and regulations outlined by CRF 200 for future emergency federal funding and routine federal funding. Walla Walla County is committed to the importance of managing federal funding. Auditor’s Remarks   We appreciate the County's commitment to resolving this finding. 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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement) establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.

Walla Walla County January 1, 2022 through December 31, 2022 2022-002       The County had inadequate controls for ensuring compliance with suspension and debarment requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-004       Description of Condition During fiscal year 2022, the County spent a total of $6.53 million in federal funding under the Coronavirus State and Local Fiscal Recovery Funds program. Of this amount, the County used $3.68 million to provide government services to the extent that the COVID-19 pandemic caused a reduction in revenue collected in its most recent fiscal year. The County awarded the remaining $2.85 million to a subrecipient to provide emergency rental assistance. 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 requirements prohibit program recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded. The County may verify this by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration's System for Award Management at sam.gov. The County must perform this verification before entering into the contract or purchasing from contractors. Additionally, the County must keep documentation demonstrating compliance with this federal requirement. Our audit found the County did not have effective internal controls for verifying the suspension and debarment status of contractors before entering into contracts with or purchasing from them. Specifically, the County did not verify that seven contractors it paid $25,000 or more during fiscal year 2022 were not suspended or debarred. We consider this control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, it did not verify contractors were not suspended or debarred and thus did not comply with federal regulations. Effect of Condition The County did not verify whether seven contractors were suspended or debarred before entering into contracts with or purchasing from them. The County paid these contractors $6,554,795 during fiscal year 2022. Without adequate internal controls, the County cannot ensure contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. The County subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the County improve its internal controls to ensure it verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts or purchasing from them. County’s Response Noted, the County will work with the departments responsible for administering federal funds to create procedures requiring the review of the System Of Award Management (SAM) for suspended or debarred parties in accordance with Federal Regulation. We agree with the auditor's comments and the county recognizes the challenges with staffing, training, onboarding, and managing unforeseen large amounts of federal funds coming into the county during COVID response. The county will be utilizing a contractor to assist in establishing policies, procedures, training, and strategic improvements to allow quick onboarding of staff in policies, procedures and regulations outlined by CRF 200 for future emergency federal funding and routine federal funding. Walla Walla County is committed to the importance of managing federal funding. Auditor’s Remarks   We appreciate the County's commitment to resolving this finding. 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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement) establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.