Audit 321441

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-002 The County did not have adequate internal controls for ensuring compliance with federal requirements for suspension and debarment and subrecipient monitoring. 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: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-127 CLH31030 SFY23-46141-003 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) program 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. During 2023, the County spent $16,923,695 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $7,472,700 passed through to nine subrecipients to fulfill some of the program’s objectives. 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. Suspension and Debarment Federal regulations prohibit recipients from contracting with, purchasing from or making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services it expects to equal or exceed $25,000 and for all subawards, regardless of award amount, paid all or in part with federal funds, it must verify the contractors or subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient 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 verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the County did not have adequate controls in place to verify one subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Subrecipient Monitoring Whenever the County passes on federal funding to subrecipients, federal regulations require it to clearly identify the award as a subaward by providing the information described in the regulation and including all applicable program requirements in the agreement. Further, the County must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. During the audit period, the County contracted with nine subrecipients through 11 subaward agreements to carry out the SLFRF program’s objectives. However, in one of the 11 subaward agreements, the County did not include all required information to provide the subrecipient with applicable program requirements. This was for a subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Suspension and Debarment The County typically includes a suspension and debarment clause in contracts that it intends to pay with federal funds. However, for this subaward agreement, County staff did not follow the established process to include the suspension and debarment clause in the agreement. Subrecipient Monitoring The County has a template contract to use with subrecipients that includes all the required elements. However, County staff did not use this template for one of the subaward agreements they entered into. Effect of Condition Suspension and Debarment The County did not obtain a written certification from the subrecipient, insert a clause into a contract or check for exclusion records at SAM.gov to verify one subrecipient it paid $419,360 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County cannot ensure the subrecipient it paid with federal funds was eligible to participate in federal programs. Any program funds the County used to pay a subrecipient that was suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the subrecipient was not suspended or debarred, we are not questioning costs. Subrecipient Monitoring The County did not include required elements in one of its subrecipient agreements. Specifically, the County did not include the following elements: • Subrecipient’s unique entity identifier • Federal award identification number • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed on the pass-through entity Without this information, subrecipients are at an increased risk of not knowing that the award comes from a federal program and that they need to comply with specific program requirements, which could lead them to spend funds for unallowable purposes. Recommendation We recommend the County strengthen its internal controls to ensure: • All subrecipients and contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs • It includes all federally required elements in its subrecipient agreements County’s Response We appreciate SAO’s efforts to help us improve program performance and compliance. In previous years, we have used a contract template for state and local fund sources and a separate contract template for federal funds that incorporates the appropriate suspension and debarment clauses and required sub-award elements. Because the funding we received from the State included a mix of state and local funds, we did always use the correct contract template. To correct this finding, OHHP will incorporate the appropriate suspension and debarment clauses and sub-award elements in all contracts going forward, regardless of fund source. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass-through entities. 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.

2023-002 The County did not have adequate internal controls for ensuring compliance with federal requirements for suspension and debarment and subrecipient monitoring. 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: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-127 CLH31030 SFY23-46141-003 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) program 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. During 2023, the County spent $16,923,695 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $7,472,700 passed through to nine subrecipients to fulfill some of the program’s objectives. 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. Suspension and Debarment Federal regulations prohibit recipients from contracting with, purchasing from or making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services it expects to equal or exceed $25,000 and for all subawards, regardless of award amount, paid all or in part with federal funds, it must verify the contractors or subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient 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 verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the County did not have adequate controls in place to verify one subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Subrecipient Monitoring Whenever the County passes on federal funding to subrecipients, federal regulations require it to clearly identify the award as a subaward by providing the information described in the regulation and including all applicable program requirements in the agreement. Further, the County must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. During the audit period, the County contracted with nine subrecipients through 11 subaward agreements to carry out the SLFRF program’s objectives. However, in one of the 11 subaward agreements, the County did not include all required information to provide the subrecipient with applicable program requirements. This was for a subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Suspension and Debarment The County typically includes a suspension and debarment clause in contracts that it intends to pay with federal funds. However, for this subaward agreement, County staff did not follow the established process to include the suspension and debarment clause in the agreement. Subrecipient Monitoring The County has a template contract to use with subrecipients that includes all the required elements. However, County staff did not use this template for one of the subaward agreements they entered into. Effect of Condition Suspension and Debarment The County did not obtain a written certification from the subrecipient, insert a clause into a contract or check for exclusion records at SAM.gov to verify one subrecipient it paid $419,360 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County cannot ensure the subrecipient it paid with federal funds was eligible to participate in federal programs. Any program funds the County used to pay a subrecipient that was suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the subrecipient was not suspended or debarred, we are not questioning costs. Subrecipient Monitoring The County did not include required elements in one of its subrecipient agreements. Specifically, the County did not include the following elements: • Subrecipient’s unique entity identifier • Federal award identification number • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed on the pass-through entity Without this information, subrecipients are at an increased risk of not knowing that the award comes from a federal program and that they need to comply with specific program requirements, which could lead them to spend funds for unallowable purposes. Recommendation We recommend the County strengthen its internal controls to ensure: • All subrecipients and contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs • It includes all federally required elements in its subrecipient agreements County’s Response We appreciate SAO’s efforts to help us improve program performance and compliance. In previous years, we have used a contract template for state and local fund sources and a separate contract template for federal funds that incorporates the appropriate suspension and debarment clauses and required sub-award elements. Because the funding we received from the State included a mix of state and local funds, we did always use the correct contract template. To correct this finding, OHHP will incorporate the appropriate suspension and debarment clauses and sub-award elements in all contracts going forward, regardless of fund source. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass-through entities. 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.

2023-002 The County did not have adequate internal controls for ensuring compliance with federal requirements for suspension and debarment and subrecipient monitoring. 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: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-127 CLH31030 SFY23-46141-003 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) program 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. During 2023, the County spent $16,923,695 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $7,472,700 passed through to nine subrecipients to fulfill some of the program’s objectives. 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. Suspension and Debarment Federal regulations prohibit recipients from contracting with, purchasing from or making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services it expects to equal or exceed $25,000 and for all subawards, regardless of award amount, paid all or in part with federal funds, it must verify the contractors or subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient 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 verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the County did not have adequate controls in place to verify one subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Subrecipient Monitoring Whenever the County passes on federal funding to subrecipients, federal regulations require it to clearly identify the award as a subaward by providing the information described in the regulation and including all applicable program requirements in the agreement. Further, the County must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. During the audit period, the County contracted with nine subrecipients through 11 subaward agreements to carry out the SLFRF program’s objectives. However, in one of the 11 subaward agreements, the County did not include all required information to provide the subrecipient with applicable program requirements. This was for a subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Suspension and Debarment The County typically includes a suspension and debarment clause in contracts that it intends to pay with federal funds. However, for this subaward agreement, County staff did not follow the established process to include the suspension and debarment clause in the agreement. Subrecipient Monitoring The County has a template contract to use with subrecipients that includes all the required elements. However, County staff did not use this template for one of the subaward agreements they entered into. Effect of Condition Suspension and Debarment The County did not obtain a written certification from the subrecipient, insert a clause into a contract or check for exclusion records at SAM.gov to verify one subrecipient it paid $419,360 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County cannot ensure the subrecipient it paid with federal funds was eligible to participate in federal programs. Any program funds the County used to pay a subrecipient that was suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the subrecipient was not suspended or debarred, we are not questioning costs. Subrecipient Monitoring The County did not include required elements in one of its subrecipient agreements. Specifically, the County did not include the following elements: • Subrecipient’s unique entity identifier • Federal award identification number • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed on the pass-through entity Without this information, subrecipients are at an increased risk of not knowing that the award comes from a federal program and that they need to comply with specific program requirements, which could lead them to spend funds for unallowable purposes. Recommendation We recommend the County strengthen its internal controls to ensure: • All subrecipients and contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs • It includes all federally required elements in its subrecipient agreements County’s Response We appreciate SAO’s efforts to help us improve program performance and compliance. In previous years, we have used a contract template for state and local fund sources and a separate contract template for federal funds that incorporates the appropriate suspension and debarment clauses and required sub-award elements. Because the funding we received from the State included a mix of state and local funds, we did always use the correct contract template. To correct this finding, OHHP will incorporate the appropriate suspension and debarment clauses and sub-award elements in all contracts going forward, regardless of fund source. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass-through entities. 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.

2023-002 The County did not have adequate internal controls for ensuring compliance with federal requirements for suspension and debarment and subrecipient monitoring. 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: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-127 CLH31030 SFY23-46141-003 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) program 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. During 2023, the County spent $16,923,695 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $7,472,700 passed through to nine subrecipients to fulfill some of the program’s objectives. 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. Suspension and Debarment Federal regulations prohibit recipients from contracting with, purchasing from or making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services it expects to equal or exceed $25,000 and for all subawards, regardless of award amount, paid all or in part with federal funds, it must verify the contractors or subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient 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 verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the County did not have adequate controls in place to verify one subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Subrecipient Monitoring Whenever the County passes on federal funding to subrecipients, federal regulations require it to clearly identify the award as a subaward by providing the information described in the regulation and including all applicable program requirements in the agreement. Further, the County must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. During the audit period, the County contracted with nine subrecipients through 11 subaward agreements to carry out the SLFRF program’s objectives. However, in one of the 11 subaward agreements, the County did not include all required information to provide the subrecipient with applicable program requirements. This was for a subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Suspension and Debarment The County typically includes a suspension and debarment clause in contracts that it intends to pay with federal funds. However, for this subaward agreement, County staff did not follow the established process to include the suspension and debarment clause in the agreement. Subrecipient Monitoring The County has a template contract to use with subrecipients that includes all the required elements. However, County staff did not use this template for one of the subaward agreements they entered into. Effect of Condition Suspension and Debarment The County did not obtain a written certification from the subrecipient, insert a clause into a contract or check for exclusion records at SAM.gov to verify one subrecipient it paid $419,360 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County cannot ensure the subrecipient it paid with federal funds was eligible to participate in federal programs. Any program funds the County used to pay a subrecipient that was suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the subrecipient was not suspended or debarred, we are not questioning costs. Subrecipient Monitoring The County did not include required elements in one of its subrecipient agreements. Specifically, the County did not include the following elements: • Subrecipient’s unique entity identifier • Federal award identification number • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed on the pass-through entity Without this information, subrecipients are at an increased risk of not knowing that the award comes from a federal program and that they need to comply with specific program requirements, which could lead them to spend funds for unallowable purposes. Recommendation We recommend the County strengthen its internal controls to ensure: • All subrecipients and contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs • It includes all federally required elements in its subrecipient agreements County’s Response We appreciate SAO’s efforts to help us improve program performance and compliance. In previous years, we have used a contract template for state and local fund sources and a separate contract template for federal funds that incorporates the appropriate suspension and debarment clauses and required sub-award elements. Because the funding we received from the State included a mix of state and local funds, we did always use the correct contract template. To correct this finding, OHHP will incorporate the appropriate suspension and debarment clauses and sub-award elements in all contracts going forward, regardless of fund source. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass-through entities. 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-001 The County had inadequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 COVID-19 – Community Development Block Grants/Entitlement Grants 14.218 – Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B22UC530007 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) program is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The County was a direct recipient of CDBG funding and spent $2,206,140 in program funds during 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The County must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The County’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the County made nine new and amended subawards in 2023 that exceeded $30,000, and it did not prepare or submit any FFATA reports for three of the nine subawards, as federal regulations require. Additionally, of the other six subawards, the County did not submit three FFATA reports on time, and two FFATA reports included incorrect subaward obligation dates. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of FFATA reporting requirements for their subawards. However, the County had turnover, and management did not clearly communicate who was responsible for submitting the reports until late 2023. Effect of Condition Failing to submit the required reports on time diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Transactions tested Subaward not reported Reported late Subaward amount incorrect* Subaward missing key elements 9 3 3 N/A 2 Dollar amount of tested transactions Subaward not reported Reported late Subaward amount incorrect Subaward missing key elements $ 1,661,538 $ 491,538 $ 1,035,000 N/A $ 115,000 Recommendation We recommend the County strengthen its internal controls to ensure it prepares and submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. County’s Response The County values the opportunity to collaborate with the State Auditor’s Office in enhancing our financial reporting processes. In 2022, we faced notable turnover in the positions responsible for FFATA reporting due to the Public Health Emergency. Furthermore, as we transitioned out of this emergency in 2023, ongoing staffing challenges contributed to a loss of historical knowledge and established practices. In response to the recommendation, the County has taken and plans to take the following actions: • Update procedures for FFATA reporting, including staff responsibilities and timelines (implemented 8/2/2024). • Ensure management oversight to ensure timely and accurate reporting. • Provide training to all staff involved in the FFATA reporting process on their responsibilities (occurred 8/1/2024) We appreciate the opportunity to work with the State Auditor’s Office staff to improve the accuracy of our FFATA reporting requirements. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). 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.

2023-002 The County did not have adequate internal controls for ensuring compliance with federal requirements for suspension and debarment and subrecipient monitoring. 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: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-127 CLH31030 SFY23-46141-003 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) program 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. During 2023, the County spent $16,923,695 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $7,472,700 passed through to nine subrecipients to fulfill some of the program’s objectives. 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. Suspension and Debarment Federal regulations prohibit recipients from contracting with, purchasing from or making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services it expects to equal or exceed $25,000 and for all subawards, regardless of award amount, paid all or in part with federal funds, it must verify the contractors or subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient 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 verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the County did not have adequate controls in place to verify one subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Subrecipient Monitoring Whenever the County passes on federal funding to subrecipients, federal regulations require it to clearly identify the award as a subaward by providing the information described in the regulation and including all applicable program requirements in the agreement. Further, the County must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. During the audit period, the County contracted with nine subrecipients through 11 subaward agreements to carry out the SLFRF program’s objectives. However, in one of the 11 subaward agreements, the County did not include all required information to provide the subrecipient with applicable program requirements. This was for a subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Suspension and Debarment The County typically includes a suspension and debarment clause in contracts that it intends to pay with federal funds. However, for this subaward agreement, County staff did not follow the established process to include the suspension and debarment clause in the agreement. Subrecipient Monitoring The County has a template contract to use with subrecipients that includes all the required elements. However, County staff did not use this template for one of the subaward agreements they entered into. Effect of Condition Suspension and Debarment The County did not obtain a written certification from the subrecipient, insert a clause into a contract or check for exclusion records at SAM.gov to verify one subrecipient it paid $419,360 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County cannot ensure the subrecipient it paid with federal funds was eligible to participate in federal programs. Any program funds the County used to pay a subrecipient that was suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the subrecipient was not suspended or debarred, we are not questioning costs. Subrecipient Monitoring The County did not include required elements in one of its subrecipient agreements. Specifically, the County did not include the following elements: • Subrecipient’s unique entity identifier • Federal award identification number • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed on the pass-through entity Without this information, subrecipients are at an increased risk of not knowing that the award comes from a federal program and that they need to comply with specific program requirements, which could lead them to spend funds for unallowable purposes. Recommendation We recommend the County strengthen its internal controls to ensure: • All subrecipients and contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs • It includes all federally required elements in its subrecipient agreements County’s Response We appreciate SAO’s efforts to help us improve program performance and compliance. In previous years, we have used a contract template for state and local fund sources and a separate contract template for federal funds that incorporates the appropriate suspension and debarment clauses and required sub-award elements. Because the funding we received from the State included a mix of state and local funds, we did always use the correct contract template. To correct this finding, OHHP will incorporate the appropriate suspension and debarment clauses and sub-award elements in all contracts going forward, regardless of fund source. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass-through entities. 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.

2023-002 The County did not have adequate internal controls for ensuring compliance with federal requirements for suspension and debarment and subrecipient monitoring. 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: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-127 CLH31030 SFY23-46141-003 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) program 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. During 2023, the County spent $16,923,695 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $7,472,700 passed through to nine subrecipients to fulfill some of the program’s objectives. 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. Suspension and Debarment Federal regulations prohibit recipients from contracting with, purchasing from or making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services it expects to equal or exceed $25,000 and for all subawards, regardless of award amount, paid all or in part with federal funds, it must verify the contractors or subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient 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 verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the County did not have adequate controls in place to verify one subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Subrecipient Monitoring Whenever the County passes on federal funding to subrecipients, federal regulations require it to clearly identify the award as a subaward by providing the information described in the regulation and including all applicable program requirements in the agreement. Further, the County must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. During the audit period, the County contracted with nine subrecipients through 11 subaward agreements to carry out the SLFRF program’s objectives. However, in one of the 11 subaward agreements, the County did not include all required information to provide the subrecipient with applicable program requirements. This was for a subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Suspension and Debarment The County typically includes a suspension and debarment clause in contracts that it intends to pay with federal funds. However, for this subaward agreement, County staff did not follow the established process to include the suspension and debarment clause in the agreement. Subrecipient Monitoring The County has a template contract to use with subrecipients that includes all the required elements. However, County staff did not use this template for one of the subaward agreements they entered into. Effect of Condition Suspension and Debarment The County did not obtain a written certification from the subrecipient, insert a clause into a contract or check for exclusion records at SAM.gov to verify one subrecipient it paid $419,360 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County cannot ensure the subrecipient it paid with federal funds was eligible to participate in federal programs. Any program funds the County used to pay a subrecipient that was suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the subrecipient was not suspended or debarred, we are not questioning costs. Subrecipient Monitoring The County did not include required elements in one of its subrecipient agreements. Specifically, the County did not include the following elements: • Subrecipient’s unique entity identifier • Federal award identification number • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed on the pass-through entity Without this information, subrecipients are at an increased risk of not knowing that the award comes from a federal program and that they need to comply with specific program requirements, which could lead them to spend funds for unallowable purposes. Recommendation We recommend the County strengthen its internal controls to ensure: • All subrecipients and contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs • It includes all federally required elements in its subrecipient agreements County’s Response We appreciate SAO’s efforts to help us improve program performance and compliance. In previous years, we have used a contract template for state and local fund sources and a separate contract template for federal funds that incorporates the appropriate suspension and debarment clauses and required sub-award elements. Because the funding we received from the State included a mix of state and local funds, we did always use the correct contract template. To correct this finding, OHHP will incorporate the appropriate suspension and debarment clauses and sub-award elements in all contracts going forward, regardless of fund source. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass-through entities. 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.

2023-002 The County did not have adequate internal controls for ensuring compliance with federal requirements for suspension and debarment and subrecipient monitoring. 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: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-127 CLH31030 SFY23-46141-003 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) program 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. During 2023, the County spent $16,923,695 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $7,472,700 passed through to nine subrecipients to fulfill some of the program’s objectives. 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. Suspension and Debarment Federal regulations prohibit recipients from contracting with, purchasing from or making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services it expects to equal or exceed $25,000 and for all subawards, regardless of award amount, paid all or in part with federal funds, it must verify the contractors or subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient 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 verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the County did not have adequate controls in place to verify one subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Subrecipient Monitoring Whenever the County passes on federal funding to subrecipients, federal regulations require it to clearly identify the award as a subaward by providing the information described in the regulation and including all applicable program requirements in the agreement. Further, the County must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. During the audit period, the County contracted with nine subrecipients through 11 subaward agreements to carry out the SLFRF program’s objectives. However, in one of the 11 subaward agreements, the County did not include all required information to provide the subrecipient with applicable program requirements. This was for a subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Suspension and Debarment The County typically includes a suspension and debarment clause in contracts that it intends to pay with federal funds. However, for this subaward agreement, County staff did not follow the established process to include the suspension and debarment clause in the agreement. Subrecipient Monitoring The County has a template contract to use with subrecipients that includes all the required elements. However, County staff did not use this template for one of the subaward agreements they entered into. Effect of Condition Suspension and Debarment The County did not obtain a written certification from the subrecipient, insert a clause into a contract or check for exclusion records at SAM.gov to verify one subrecipient it paid $419,360 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County cannot ensure the subrecipient it paid with federal funds was eligible to participate in federal programs. Any program funds the County used to pay a subrecipient that was suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the subrecipient was not suspended or debarred, we are not questioning costs. Subrecipient Monitoring The County did not include required elements in one of its subrecipient agreements. Specifically, the County did not include the following elements: • Subrecipient’s unique entity identifier • Federal award identification number • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed on the pass-through entity Without this information, subrecipients are at an increased risk of not knowing that the award comes from a federal program and that they need to comply with specific program requirements, which could lead them to spend funds for unallowable purposes. Recommendation We recommend the County strengthen its internal controls to ensure: • All subrecipients and contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs • It includes all federally required elements in its subrecipient agreements County’s Response We appreciate SAO’s efforts to help us improve program performance and compliance. In previous years, we have used a contract template for state and local fund sources and a separate contract template for federal funds that incorporates the appropriate suspension and debarment clauses and required sub-award elements. Because the funding we received from the State included a mix of state and local funds, we did always use the correct contract template. To correct this finding, OHHP will incorporate the appropriate suspension and debarment clauses and sub-award elements in all contracts going forward, regardless of fund source. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass-through entities. 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.

2023-002 The County did not have adequate internal controls for ensuring compliance with federal requirements for suspension and debarment and subrecipient monitoring. 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: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-127 CLH31030 SFY23-46141-003 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) program 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. During 2023, the County spent $16,923,695 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $7,472,700 passed through to nine subrecipients to fulfill some of the program’s objectives. 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. Suspension and Debarment Federal regulations prohibit recipients from contracting with, purchasing from or making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods or services it expects to equal or exceed $25,000 and for all subawards, regardless of award amount, paid all or in part with federal funds, it must verify the contractors or subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient 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 verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the County did not have adequate controls in place to verify one subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Subrecipient Monitoring Whenever the County passes on federal funding to subrecipients, federal regulations require it to clearly identify the award as a subaward by providing the information described in the regulation and including all applicable program requirements in the agreement. Further, the County must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. During the audit period, the County contracted with nine subrecipients through 11 subaward agreements to carry out the SLFRF program’s objectives. However, in one of the 11 subaward agreements, the County did not include all required information to provide the subrecipient with applicable program requirements. This was for a subrecipient that received federal funding through an indirect award the County received through the Washington Statement Department of Commerce We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Suspension and Debarment The County typically includes a suspension and debarment clause in contracts that it intends to pay with federal funds. However, for this subaward agreement, County staff did not follow the established process to include the suspension and debarment clause in the agreement. Subrecipient Monitoring The County has a template contract to use with subrecipients that includes all the required elements. However, County staff did not use this template for one of the subaward agreements they entered into. Effect of Condition Suspension and Debarment The County did not obtain a written certification from the subrecipient, insert a clause into a contract or check for exclusion records at SAM.gov to verify one subrecipient it paid $419,360 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the County cannot ensure the subrecipient it paid with federal funds was eligible to participate in federal programs. Any program funds the County used to pay a subrecipient that was suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the subrecipient was not suspended or debarred, we are not questioning costs. Subrecipient Monitoring The County did not include required elements in one of its subrecipient agreements. Specifically, the County did not include the following elements: • Subrecipient’s unique entity identifier • Federal award identification number • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed on the pass-through entity Without this information, subrecipients are at an increased risk of not knowing that the award comes from a federal program and that they need to comply with specific program requirements, which could lead them to spend funds for unallowable purposes. Recommendation We recommend the County strengthen its internal controls to ensure: • All subrecipients and contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs • It includes all federally required elements in its subrecipient agreements County’s Response We appreciate SAO’s efforts to help us improve program performance and compliance. In previous years, we have used a contract template for state and local fund sources and a separate contract template for federal funds that incorporates the appropriate suspension and debarment clauses and required sub-award elements. Because the funding we received from the State included a mix of state and local funds, we did always use the correct contract template. To correct this finding, OHHP will incorporate the appropriate suspension and debarment clauses and sub-award elements in all contracts going forward, regardless of fund source. Auditor’s Remarks We appreciate the County’s commitment to resolve this finding and thank the County 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 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass-through entities. 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.