SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
City of Spokane
January 1, 2023 through December 31, 2023
2023-001 The City’s internal controls were inadequate for ensuring compliance with federal 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 the Treasury
Federal Award/Contract Number: SLT-0533
Pass-through Entity Name: Washington State Department of Commerce
Pass-through Award/Contract Number: SFY23-46141-011
SFY23-46141-014
21-4619C-133
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The purpose of the Coronavirus State and Local Fiscal Recovery funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2023, the City spent about $34.6 million in program funds for these activities.
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 recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City 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 are not suspended or debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining 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 City must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement.
The City has a process to verify the suspension and debarment status of contractors that it pays more than $25,000 with federal funds. However, the City entered into three new contracts in 2023 and paid these contractors more than $25,000 for public safety vehicles and equipment without following its established process to verify the contractors’ status.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The City purchased vehicles and equipment from two contractors using other governments’ contracts, which is commonly referred to as “piggybacking.” City staff responsible for the purchases relied on the awarding agency’s suspension and debarment verification to ensure compliance with this requirement. By relying on the awarding agency, staff did not follow the City’s standard procedure of obtaining written certifications from the contractors.
Additionally, the City purchased equipment from another contractor and did not initially intend to use federal funds to pay them. Therefore, City staff did not obtain a written certification of the contractor’s suspension and debarment status when they executed the contract. When the City decided to use federal funds for this purchase, staff responsible for the purchase did not verify at that time that the contractor was not suspended or debarred from participating in federal programs.
Effect of Condition
The City did not obtain written certifications, insert a clause into the contracts or check for exclusion records at SAM.gov to verify the contractors it paid with federal funds were not suspended or debarred. The City paid $3.6 million to these contractors in 2023.
Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the federal grantor could potentially recover them.
During the audit, we verified the contractors were not suspended or debarred, so we are not questioning costs for these payments.
Recommendation
We recommend the City strengthen its internal controls to ensure it verifies that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred. We also recommend the City establish a process to ensure it verifies the suspension and debarment status of contractors it purchases from when piggybacking.
City’s Response
The City understands the importance of verifying it is not contracting with, making purchases with, or making subawards to parties debarred or suspended from doing business with the federal government.
The City did not contract with any parties who were debarred or suspended from doing business with the federal government during the audited period. The City currently has a robust process to verify and document its contractors, consultants and vendors are neither debarred nor suspended. This process adds required certification language to all City agreements to document compliance. While two of these contracts were reviewed and the compliant status of the providers were verified through the existing cooperative agreement, unfortunately the City’s process did not capture the needed requirement to verify at the lower tier. The City is now putting into place a requirement that all subawards, purchase agreements and contracts involving federal funds over $25,000 will include the required certification even if the contract is derived from “piggy backing” and includes suspension and debarment language. The City will also add measures to our existing process to capture such agreements that were not initially identified as federal funding and later classified as such to include additional steps to ensure the required certification language is included to correct this oversight.
The City extends our appreciation to the State Auditor’s Office for assisting in identifying deficiencies in our procedures. We are dedicated to executing contracts and purchase agreements that are compliant with federal requirements and are confident that the additional implemented process will ensure compliance with suspension and debarment certification requirements.
Auditor’s Remarks
We appreciate the City’s commitment to resolve this finding and thank the City for its cooperation and assistance during the audit. We will review corrective action taken during the next 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 on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
City of Spokane
January 1, 2023 through December 31, 2023
2023-001 The City’s internal controls were inadequate for ensuring compliance with federal 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 the Treasury
Federal Award/Contract Number: SLT-0533
Pass-through Entity Name: Washington State Department of Commerce
Pass-through Award/Contract Number: SFY23-46141-011
SFY23-46141-014
21-4619C-133
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The purpose of the Coronavirus State and Local Fiscal Recovery funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2023, the City spent about $34.6 million in program funds for these activities.
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 recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City 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 are not suspended or debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining 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 City must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement.
The City has a process to verify the suspension and debarment status of contractors that it pays more than $25,000 with federal funds. However, the City entered into three new contracts in 2023 and paid these contractors more than $25,000 for public safety vehicles and equipment without following its established process to verify the contractors’ status.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The City purchased vehicles and equipment from two contractors using other governments’ contracts, which is commonly referred to as “piggybacking.” City staff responsible for the purchases relied on the awarding agency’s suspension and debarment verification to ensure compliance with this requirement. By relying on the awarding agency, staff did not follow the City’s standard procedure of obtaining written certifications from the contractors.
Additionally, the City purchased equipment from another contractor and did not initially intend to use federal funds to pay them. Therefore, City staff did not obtain a written certification of the contractor’s suspension and debarment status when they executed the contract. When the City decided to use federal funds for this purchase, staff responsible for the purchase did not verify at that time that the contractor was not suspended or debarred from participating in federal programs.
Effect of Condition
The City did not obtain written certifications, insert a clause into the contracts or check for exclusion records at SAM.gov to verify the contractors it paid with federal funds were not suspended or debarred. The City paid $3.6 million to these contractors in 2023.
Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the federal grantor could potentially recover them.
During the audit, we verified the contractors were not suspended or debarred, so we are not questioning costs for these payments.
Recommendation
We recommend the City strengthen its internal controls to ensure it verifies that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred. We also recommend the City establish a process to ensure it verifies the suspension and debarment status of contractors it purchases from when piggybacking.
City’s Response
The City understands the importance of verifying it is not contracting with, making purchases with, or making subawards to parties debarred or suspended from doing business with the federal government.
The City did not contract with any parties who were debarred or suspended from doing business with the federal government during the audited period. The City currently has a robust process to verify and document its contractors, consultants and vendors are neither debarred nor suspended. This process adds required certification language to all City agreements to document compliance. While two of these contracts were reviewed and the compliant status of the providers were verified through the existing cooperative agreement, unfortunately the City’s process did not capture the needed requirement to verify at the lower tier. The City is now putting into place a requirement that all subawards, purchase agreements and contracts involving federal funds over $25,000 will include the required certification even if the contract is derived from “piggy backing” and includes suspension and debarment language. The City will also add measures to our existing process to capture such agreements that were not initially identified as federal funding and later classified as such to include additional steps to ensure the required certification language is included to correct this oversight.
The City extends our appreciation to the State Auditor’s Office for assisting in identifying deficiencies in our procedures. We are dedicated to executing contracts and purchase agreements that are compliant with federal requirements and are confident that the additional implemented process will ensure compliance with suspension and debarment certification requirements.
Auditor’s Remarks
We appreciate the City’s commitment to resolve this finding and thank the City for its cooperation and assistance during the audit. We will review corrective action taken during the next 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 on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
City of Spokane
January 1, 2023 through December 31, 2023
2023-001 The City’s internal controls were inadequate for ensuring compliance with federal 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 the Treasury
Federal Award/Contract Number: SLT-0533
Pass-through Entity Name: Washington State Department of Commerce
Pass-through Award/Contract Number: SFY23-46141-011
SFY23-46141-014
21-4619C-133
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The purpose of the Coronavirus State and Local Fiscal Recovery funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2023, the City spent about $34.6 million in program funds for these activities.
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 recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City 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 are not suspended or debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining 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 City must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement.
The City has a process to verify the suspension and debarment status of contractors that it pays more than $25,000 with federal funds. However, the City entered into three new contracts in 2023 and paid these contractors more than $25,000 for public safety vehicles and equipment without following its established process to verify the contractors’ status.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The City purchased vehicles and equipment from two contractors using other governments’ contracts, which is commonly referred to as “piggybacking.” City staff responsible for the purchases relied on the awarding agency’s suspension and debarment verification to ensure compliance with this requirement. By relying on the awarding agency, staff did not follow the City’s standard procedure of obtaining written certifications from the contractors.
Additionally, the City purchased equipment from another contractor and did not initially intend to use federal funds to pay them. Therefore, City staff did not obtain a written certification of the contractor’s suspension and debarment status when they executed the contract. When the City decided to use federal funds for this purchase, staff responsible for the purchase did not verify at that time that the contractor was not suspended or debarred from participating in federal programs.
Effect of Condition
The City did not obtain written certifications, insert a clause into the contracts or check for exclusion records at SAM.gov to verify the contractors it paid with federal funds were not suspended or debarred. The City paid $3.6 million to these contractors in 2023.
Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the federal grantor could potentially recover them.
During the audit, we verified the contractors were not suspended or debarred, so we are not questioning costs for these payments.
Recommendation
We recommend the City strengthen its internal controls to ensure it verifies that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred. We also recommend the City establish a process to ensure it verifies the suspension and debarment status of contractors it purchases from when piggybacking.
City’s Response
The City understands the importance of verifying it is not contracting with, making purchases with, or making subawards to parties debarred or suspended from doing business with the federal government.
The City did not contract with any parties who were debarred or suspended from doing business with the federal government during the audited period. The City currently has a robust process to verify and document its contractors, consultants and vendors are neither debarred nor suspended. This process adds required certification language to all City agreements to document compliance. While two of these contracts were reviewed and the compliant status of the providers were verified through the existing cooperative agreement, unfortunately the City’s process did not capture the needed requirement to verify at the lower tier. The City is now putting into place a requirement that all subawards, purchase agreements and contracts involving federal funds over $25,000 will include the required certification even if the contract is derived from “piggy backing” and includes suspension and debarment language. The City will also add measures to our existing process to capture such agreements that were not initially identified as federal funding and later classified as such to include additional steps to ensure the required certification language is included to correct this oversight.
The City extends our appreciation to the State Auditor’s Office for assisting in identifying deficiencies in our procedures. We are dedicated to executing contracts and purchase agreements that are compliant with federal requirements and are confident that the additional implemented process will ensure compliance with suspension and debarment certification requirements.
Auditor’s Remarks
We appreciate the City’s commitment to resolve this finding and thank the City for its cooperation and assistance during the audit. We will review corrective action taken during the next 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 on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
City of Spokane
January 1, 2023 through December 31, 2023
2023-001 The City’s internal controls were inadequate for ensuring compliance with federal 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 the Treasury
Federal Award/Contract Number: SLT-0533
Pass-through Entity Name: Washington State Department of Commerce
Pass-through Award/Contract Number: SFY23-46141-011
SFY23-46141-014
21-4619C-133
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The purpose of the Coronavirus State and Local Fiscal Recovery funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2023, the City spent about $34.6 million in program funds for these activities.
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 recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City 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 are not suspended or debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining 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 City must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement.
The City has a process to verify the suspension and debarment status of contractors that it pays more than $25,000 with federal funds. However, the City entered into three new contracts in 2023 and paid these contractors more than $25,000 for public safety vehicles and equipment without following its established process to verify the contractors’ status.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The City purchased vehicles and equipment from two contractors using other governments’ contracts, which is commonly referred to as “piggybacking.” City staff responsible for the purchases relied on the awarding agency’s suspension and debarment verification to ensure compliance with this requirement. By relying on the awarding agency, staff did not follow the City’s standard procedure of obtaining written certifications from the contractors.
Additionally, the City purchased equipment from another contractor and did not initially intend to use federal funds to pay them. Therefore, City staff did not obtain a written certification of the contractor’s suspension and debarment status when they executed the contract. When the City decided to use federal funds for this purchase, staff responsible for the purchase did not verify at that time that the contractor was not suspended or debarred from participating in federal programs.
Effect of Condition
The City did not obtain written certifications, insert a clause into the contracts or check for exclusion records at SAM.gov to verify the contractors it paid with federal funds were not suspended or debarred. The City paid $3.6 million to these contractors in 2023.
Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the federal grantor could potentially recover them.
During the audit, we verified the contractors were not suspended or debarred, so we are not questioning costs for these payments.
Recommendation
We recommend the City strengthen its internal controls to ensure it verifies that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred. We also recommend the City establish a process to ensure it verifies the suspension and debarment status of contractors it purchases from when piggybacking.
City’s Response
The City understands the importance of verifying it is not contracting with, making purchases with, or making subawards to parties debarred or suspended from doing business with the federal government.
The City did not contract with any parties who were debarred or suspended from doing business with the federal government during the audited period. The City currently has a robust process to verify and document its contractors, consultants and vendors are neither debarred nor suspended. This process adds required certification language to all City agreements to document compliance. While two of these contracts were reviewed and the compliant status of the providers were verified through the existing cooperative agreement, unfortunately the City’s process did not capture the needed requirement to verify at the lower tier. The City is now putting into place a requirement that all subawards, purchase agreements and contracts involving federal funds over $25,000 will include the required certification even if the contract is derived from “piggy backing” and includes suspension and debarment language. The City will also add measures to our existing process to capture such agreements that were not initially identified as federal funding and later classified as such to include additional steps to ensure the required certification language is included to correct this oversight.
The City extends our appreciation to the State Auditor’s Office for assisting in identifying deficiencies in our procedures. We are dedicated to executing contracts and purchase agreements that are compliant with federal requirements and are confident that the additional implemented process will ensure compliance with suspension and debarment certification requirements.
Auditor’s Remarks
We appreciate the City’s commitment to resolve this finding and thank the City for its cooperation and assistance during the audit. We will review corrective action taken during the next 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 on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.