FAC Explorer

Audit 321608

FY End
2023-12-31
Total Expended
$54.03M
Findings
6
Programs
6
Organization: King County Regional Homelessness Authority (WA)
Year: 2023 Accepted: 2024-09-27
Auditor: Office of the Washington State Auditor

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
498858 2023-001 Significant Deficiency Yes M
498859 2023-001 Significant Deficiency Yes M
498860 2023-001 Significant Deficiency Yes M
1075300 2023-001 Significant Deficiency Yes M
1075301 2023-001 Significant Deficiency Yes M
1075302 2023-001 Significant Deficiency Yes M

Programs

ALN Program Spent Major Findings
14.267 Continuum of Care Program $15.01M Yes 0
21.027 Covid-19 Coronavirus State and Local Fiscal Recovery Funds $7.83M Yes 1
14.231 Covid-19 Emergency Solutions Grant Program $3.80M - 0
14.231 Emergency Solutions Grant Program $489,962 - 0
14.218 Community Development Block Grants/entitlement Grants $294,881 - 0
14.218 Covid-19 Community Development Block Grants/entitlement Grants $284,966 - 0

Contacts

Name Title Type
JC77VNK7P7D3 James Rouse Auditee
2067954613 Joseph Simmons Auditor
No contacts on file

Notes to SEFA

Title: Note 1 - Basis of Accounting Accounting Policies: This Schedule is prepared on the same basis of accounting as the Authority’s financial statements except for the amounts passed through to subrecipients. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Federal funds are determined to be expended when KCRHA becomes obligated to the subrecipients for payment. De Minimis Rate Used: N Rate Explanation: Note 2 – Federal De Minimis Indirect Cost Rate The Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Indirect costs reported on the SEFA are determined by either the fixed amount awarded or the indirect rates agreed upon by grantors. When indirect costs are not explicitly outlined in the grant agreements, we obtain prior approval from our grantors to recover these costs. This Schedule is prepared on the same basis of accounting as the Authority’s financial statements except for the amounts passed through to subrecipients. Federal funds are determined to be expended when KCRHA becomes obligated to the subrecipients for payment.
Title: Note 2 – Federal De Minimis Indirect Cost Rate Accounting Policies: This Schedule is prepared on the same basis of accounting as the Authority’s financial statements except for the amounts passed through to subrecipients. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Federal funds are determined to be expended when KCRHA becomes obligated to the subrecipients for payment. De Minimis Rate Used: N Rate Explanation: Note 2 – Federal De Minimis Indirect Cost Rate The Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Indirect costs reported on the SEFA are determined by either the fixed amount awarded or the indirect rates agreed upon by grantors. When indirect costs are not explicitly outlined in the grant agreements, we obtain prior approval from our grantors to recover these costs. The Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Indirect costs reported on the SEFA are determined by either the fixed amount awarded or the indirect rates agreed upon by grantors. When indirect costs are not explicitly outlined in the grant agreements, we obtain prior approval from our grantors to recover these costs.
Title: Note 3 – Program Costs Accounting Policies: This Schedule is prepared on the same basis of accounting as the Authority’s financial statements except for the amounts passed through to subrecipients. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Federal funds are determined to be expended when KCRHA becomes obligated to the subrecipients for payment. De Minimis Rate Used: N Rate Explanation: Note 2 – Federal De Minimis Indirect Cost Rate The Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Indirect costs reported on the SEFA are determined by either the fixed amount awarded or the indirect rates agreed upon by grantors. When indirect costs are not explicitly outlined in the grant agreements, we obtain prior approval from our grantors to recover these costs. The amounts shown as current year expenditures represent only the federal grant portion of the program costs. Entire program costs, including the Authority’s portion, are more than shown. Such expenditures are recognized following, as applicable, either the cost principles in the OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

Finding Details

Finding 2023-001
King County Regional Homelessness Authority January 1, 2023 through December 31, 2023 2023-001 The Authority’s internal controls were inadequate for ensuring compliance with federal requirements for 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: King County, City of Seattle and the Washington State Department of Commerce Pass-through Award/Contract Number: 6277361 DM22-5212 SFY23-46141-002 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background 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 Authority spent $23,641,074 in program funds to provide homelessness and shelter services. Of this amount, the Authority passed through $21,665,841.56 in 41 subaward agreements to 21 subrecipients to fulfill some of the program’s objectives. The program funds the Authority passed through to its subrecipients funded homelessness mitigation projects related to COVID-19. These projects included COVID-19 mitigation in shelters, capacity building, providing emergency housing services assistance to households, rapid rehousing, safe parking and non-congregate shelter resources. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When the Authority passes on federal funds to subrecipients, federal regulations require the Authority to ensure every subaward agreement clearly identifies that it is a federal award and includes the applicable requirements. Federal regulations require the Authority to include 14 federal award identification elements in each subaward agreement. When passing federal funding to subrecipients, federal regulations also require the Authority to monitor them and ensure they comply with the federal award’s terms and conditions. Description of Condition Our audit found the Authority’s internal controls were ineffective for ensuring it included all 14 required elements in the subaward agreements. Specifically, the Authority did not include the following elements: • Subrecipients’ Unique Entity Identifiers • Federal Award Identification Number (FAIN) • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of the federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed by the pass-through entity • Indirect cost rate We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Authority was recently established and began full-scale operations in 2022. It was still expanding its finance and accounting staff and developing its subrecipient monitoring procedures during the 2023 audit period. The Authority implemented processes and procedures to ensure it included all 14 required elements in any new subaward agreements after receiving the prior audit finding. However, due to staff turnover and technical limitations in its grant management software, the Authority was unable to issue amendments to existing subawards to include these required elements promptly to ensure compliance. Effect of Condition The Authority did not include all the required information in 11 subaward agreements. When subaward agreements do not include the required information, subrecipients are at an increased risk of not knowing they need to comply with specific program requirements, which could lead them to spend the funds for unallowable purposes. Recommendation We recommend the Authority include all required elements in its subrecipient agreements. We also recommend the Authority strengthen its controls to ensure compliance with federal subrecipient monitoring requirements. This should include: • Dedicating the necessary resources and adequately training staff responsible for administering federal programs • Continuing to develop and establish policies and procedures to ensure compliance with subrecipient monitoring requirements Authority’s Response KCRHA agrees with the auditors' recommendations, and the following action will be taken to address the finding: • New grant management software will be implemented in Q4 2024 to significantly reduce error prone manual processes. • Experienced accountants were hired in Q1 and Q2 2024 to replace consultants and build the knowledge and expertise of the KCRHA team and improve controls, policies, and procedures. • Training efforts will continue to enhance team skills and a knowledge base, which will be increasingly effective with a stabilizing workforce. • Certain key positions (e.g., Dir. of Contracts and Compliance) have been and will continue to be added to strengthen the oversight of federal compliance. The Contracts and Compliance teams hired experienced FTE’s in Q2 and Q3. Auditor’s Remarks We thank the Authority for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.
Finding 2023-001
King County Regional Homelessness Authority January 1, 2023 through December 31, 2023 2023-001 The Authority’s internal controls were inadequate for ensuring compliance with federal requirements for 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: King County, City of Seattle and the Washington State Department of Commerce Pass-through Award/Contract Number: 6277361 DM22-5212 SFY23-46141-002 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background 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 Authority spent $23,641,074 in program funds to provide homelessness and shelter services. Of this amount, the Authority passed through $21,665,841.56 in 41 subaward agreements to 21 subrecipients to fulfill some of the program’s objectives. The program funds the Authority passed through to its subrecipients funded homelessness mitigation projects related to COVID-19. These projects included COVID-19 mitigation in shelters, capacity building, providing emergency housing services assistance to households, rapid rehousing, safe parking and non-congregate shelter resources. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When the Authority passes on federal funds to subrecipients, federal regulations require the Authority to ensure every subaward agreement clearly identifies that it is a federal award and includes the applicable requirements. Federal regulations require the Authority to include 14 federal award identification elements in each subaward agreement. When passing federal funding to subrecipients, federal regulations also require the Authority to monitor them and ensure they comply with the federal award’s terms and conditions. Description of Condition Our audit found the Authority’s internal controls were ineffective for ensuring it included all 14 required elements in the subaward agreements. Specifically, the Authority did not include the following elements: • Subrecipients’ Unique Entity Identifiers • Federal Award Identification Number (FAIN) • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of the federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed by the pass-through entity • Indirect cost rate We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Authority was recently established and began full-scale operations in 2022. It was still expanding its finance and accounting staff and developing its subrecipient monitoring procedures during the 2023 audit period. The Authority implemented processes and procedures to ensure it included all 14 required elements in any new subaward agreements after receiving the prior audit finding. However, due to staff turnover and technical limitations in its grant management software, the Authority was unable to issue amendments to existing subawards to include these required elements promptly to ensure compliance. Effect of Condition The Authority did not include all the required information in 11 subaward agreements. When subaward agreements do not include the required information, subrecipients are at an increased risk of not knowing they need to comply with specific program requirements, which could lead them to spend the funds for unallowable purposes. Recommendation We recommend the Authority include all required elements in its subrecipient agreements. We also recommend the Authority strengthen its controls to ensure compliance with federal subrecipient monitoring requirements. This should include: • Dedicating the necessary resources and adequately training staff responsible for administering federal programs • Continuing to develop and establish policies and procedures to ensure compliance with subrecipient monitoring requirements Authority’s Response KCRHA agrees with the auditors' recommendations, and the following action will be taken to address the finding: • New grant management software will be implemented in Q4 2024 to significantly reduce error prone manual processes. • Experienced accountants were hired in Q1 and Q2 2024 to replace consultants and build the knowledge and expertise of the KCRHA team and improve controls, policies, and procedures. • Training efforts will continue to enhance team skills and a knowledge base, which will be increasingly effective with a stabilizing workforce. • Certain key positions (e.g., Dir. of Contracts and Compliance) have been and will continue to be added to strengthen the oversight of federal compliance. The Contracts and Compliance teams hired experienced FTE’s in Q2 and Q3. Auditor’s Remarks We thank the Authority for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.
Finding 2023-001
King County Regional Homelessness Authority January 1, 2023 through December 31, 2023 2023-001 The Authority’s internal controls were inadequate for ensuring compliance with federal requirements for 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: King County, City of Seattle and the Washington State Department of Commerce Pass-through Award/Contract Number: 6277361 DM22-5212 SFY23-46141-002 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background 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 Authority spent $23,641,074 in program funds to provide homelessness and shelter services. Of this amount, the Authority passed through $21,665,841.56 in 41 subaward agreements to 21 subrecipients to fulfill some of the program’s objectives. The program funds the Authority passed through to its subrecipients funded homelessness mitigation projects related to COVID-19. These projects included COVID-19 mitigation in shelters, capacity building, providing emergency housing services assistance to households, rapid rehousing, safe parking and non-congregate shelter resources. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When the Authority passes on federal funds to subrecipients, federal regulations require the Authority to ensure every subaward agreement clearly identifies that it is a federal award and includes the applicable requirements. Federal regulations require the Authority to include 14 federal award identification elements in each subaward agreement. When passing federal funding to subrecipients, federal regulations also require the Authority to monitor them and ensure they comply with the federal award’s terms and conditions. Description of Condition Our audit found the Authority’s internal controls were ineffective for ensuring it included all 14 required elements in the subaward agreements. Specifically, the Authority did not include the following elements: • Subrecipients’ Unique Entity Identifiers • Federal Award Identification Number (FAIN) • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of the federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed by the pass-through entity • Indirect cost rate We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Authority was recently established and began full-scale operations in 2022. It was still expanding its finance and accounting staff and developing its subrecipient monitoring procedures during the 2023 audit period. The Authority implemented processes and procedures to ensure it included all 14 required elements in any new subaward agreements after receiving the prior audit finding. However, due to staff turnover and technical limitations in its grant management software, the Authority was unable to issue amendments to existing subawards to include these required elements promptly to ensure compliance. Effect of Condition The Authority did not include all the required information in 11 subaward agreements. When subaward agreements do not include the required information, subrecipients are at an increased risk of not knowing they need to comply with specific program requirements, which could lead them to spend the funds for unallowable purposes. Recommendation We recommend the Authority include all required elements in its subrecipient agreements. We also recommend the Authority strengthen its controls to ensure compliance with federal subrecipient monitoring requirements. This should include: • Dedicating the necessary resources and adequately training staff responsible for administering federal programs • Continuing to develop and establish policies and procedures to ensure compliance with subrecipient monitoring requirements Authority’s Response KCRHA agrees with the auditors' recommendations, and the following action will be taken to address the finding: • New grant management software will be implemented in Q4 2024 to significantly reduce error prone manual processes. • Experienced accountants were hired in Q1 and Q2 2024 to replace consultants and build the knowledge and expertise of the KCRHA team and improve controls, policies, and procedures. • Training efforts will continue to enhance team skills and a knowledge base, which will be increasingly effective with a stabilizing workforce. • Certain key positions (e.g., Dir. of Contracts and Compliance) have been and will continue to be added to strengthen the oversight of federal compliance. The Contracts and Compliance teams hired experienced FTE’s in Q2 and Q3. Auditor’s Remarks We thank the Authority for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.
Finding 2023-001
King County Regional Homelessness Authority January 1, 2023 through December 31, 2023 2023-001 The Authority’s internal controls were inadequate for ensuring compliance with federal requirements for 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: King County, City of Seattle and the Washington State Department of Commerce Pass-through Award/Contract Number: 6277361 DM22-5212 SFY23-46141-002 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background 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 Authority spent $23,641,074 in program funds to provide homelessness and shelter services. Of this amount, the Authority passed through $21,665,841.56 in 41 subaward agreements to 21 subrecipients to fulfill some of the program’s objectives. The program funds the Authority passed through to its subrecipients funded homelessness mitigation projects related to COVID-19. These projects included COVID-19 mitigation in shelters, capacity building, providing emergency housing services assistance to households, rapid rehousing, safe parking and non-congregate shelter resources. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When the Authority passes on federal funds to subrecipients, federal regulations require the Authority to ensure every subaward agreement clearly identifies that it is a federal award and includes the applicable requirements. Federal regulations require the Authority to include 14 federal award identification elements in each subaward agreement. When passing federal funding to subrecipients, federal regulations also require the Authority to monitor them and ensure they comply with the federal award’s terms and conditions. Description of Condition Our audit found the Authority’s internal controls were ineffective for ensuring it included all 14 required elements in the subaward agreements. Specifically, the Authority did not include the following elements: • Subrecipients’ Unique Entity Identifiers • Federal Award Identification Number (FAIN) • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of the federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed by the pass-through entity • Indirect cost rate We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Authority was recently established and began full-scale operations in 2022. It was still expanding its finance and accounting staff and developing its subrecipient monitoring procedures during the 2023 audit period. The Authority implemented processes and procedures to ensure it included all 14 required elements in any new subaward agreements after receiving the prior audit finding. However, due to staff turnover and technical limitations in its grant management software, the Authority was unable to issue amendments to existing subawards to include these required elements promptly to ensure compliance. Effect of Condition The Authority did not include all the required information in 11 subaward agreements. When subaward agreements do not include the required information, subrecipients are at an increased risk of not knowing they need to comply with specific program requirements, which could lead them to spend the funds for unallowable purposes. Recommendation We recommend the Authority include all required elements in its subrecipient agreements. We also recommend the Authority strengthen its controls to ensure compliance with federal subrecipient monitoring requirements. This should include: • Dedicating the necessary resources and adequately training staff responsible for administering federal programs • Continuing to develop and establish policies and procedures to ensure compliance with subrecipient monitoring requirements Authority’s Response KCRHA agrees with the auditors' recommendations, and the following action will be taken to address the finding: • New grant management software will be implemented in Q4 2024 to significantly reduce error prone manual processes. • Experienced accountants were hired in Q1 and Q2 2024 to replace consultants and build the knowledge and expertise of the KCRHA team and improve controls, policies, and procedures. • Training efforts will continue to enhance team skills and a knowledge base, which will be increasingly effective with a stabilizing workforce. • Certain key positions (e.g., Dir. of Contracts and Compliance) have been and will continue to be added to strengthen the oversight of federal compliance. The Contracts and Compliance teams hired experienced FTE’s in Q2 and Q3. Auditor’s Remarks We thank the Authority for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.
Finding 2023-001
King County Regional Homelessness Authority January 1, 2023 through December 31, 2023 2023-001 The Authority’s internal controls were inadequate for ensuring compliance with federal requirements for 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: King County, City of Seattle and the Washington State Department of Commerce Pass-through Award/Contract Number: 6277361 DM22-5212 SFY23-46141-002 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background 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 Authority spent $23,641,074 in program funds to provide homelessness and shelter services. Of this amount, the Authority passed through $21,665,841.56 in 41 subaward agreements to 21 subrecipients to fulfill some of the program’s objectives. The program funds the Authority passed through to its subrecipients funded homelessness mitigation projects related to COVID-19. These projects included COVID-19 mitigation in shelters, capacity building, providing emergency housing services assistance to households, rapid rehousing, safe parking and non-congregate shelter resources. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When the Authority passes on federal funds to subrecipients, federal regulations require the Authority to ensure every subaward agreement clearly identifies that it is a federal award and includes the applicable requirements. Federal regulations require the Authority to include 14 federal award identification elements in each subaward agreement. When passing federal funding to subrecipients, federal regulations also require the Authority to monitor them and ensure they comply with the federal award’s terms and conditions. Description of Condition Our audit found the Authority’s internal controls were ineffective for ensuring it included all 14 required elements in the subaward agreements. Specifically, the Authority did not include the following elements: • Subrecipients’ Unique Entity Identifiers • Federal Award Identification Number (FAIN) • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of the federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed by the pass-through entity • Indirect cost rate We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Authority was recently established and began full-scale operations in 2022. It was still expanding its finance and accounting staff and developing its subrecipient monitoring procedures during the 2023 audit period. The Authority implemented processes and procedures to ensure it included all 14 required elements in any new subaward agreements after receiving the prior audit finding. However, due to staff turnover and technical limitations in its grant management software, the Authority was unable to issue amendments to existing subawards to include these required elements promptly to ensure compliance. Effect of Condition The Authority did not include all the required information in 11 subaward agreements. When subaward agreements do not include the required information, subrecipients are at an increased risk of not knowing they need to comply with specific program requirements, which could lead them to spend the funds for unallowable purposes. Recommendation We recommend the Authority include all required elements in its subrecipient agreements. We also recommend the Authority strengthen its controls to ensure compliance with federal subrecipient monitoring requirements. This should include: • Dedicating the necessary resources and adequately training staff responsible for administering federal programs • Continuing to develop and establish policies and procedures to ensure compliance with subrecipient monitoring requirements Authority’s Response KCRHA agrees with the auditors' recommendations, and the following action will be taken to address the finding: • New grant management software will be implemented in Q4 2024 to significantly reduce error prone manual processes. • Experienced accountants were hired in Q1 and Q2 2024 to replace consultants and build the knowledge and expertise of the KCRHA team and improve controls, policies, and procedures. • Training efforts will continue to enhance team skills and a knowledge base, which will be increasingly effective with a stabilizing workforce. • Certain key positions (e.g., Dir. of Contracts and Compliance) have been and will continue to be added to strengthen the oversight of federal compliance. The Contracts and Compliance teams hired experienced FTE’s in Q2 and Q3. Auditor’s Remarks We thank the Authority for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.
Finding 2023-001
King County Regional Homelessness Authority January 1, 2023 through December 31, 2023 2023-001 The Authority’s internal controls were inadequate for ensuring compliance with federal requirements for 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: King County, City of Seattle and the Washington State Department of Commerce Pass-through Award/Contract Number: 6277361 DM22-5212 SFY23-46141-002 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background 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 Authority spent $23,641,074 in program funds to provide homelessness and shelter services. Of this amount, the Authority passed through $21,665,841.56 in 41 subaward agreements to 21 subrecipients to fulfill some of the program’s objectives. The program funds the Authority passed through to its subrecipients funded homelessness mitigation projects related to COVID-19. These projects included COVID-19 mitigation in shelters, capacity building, providing emergency housing services assistance to households, rapid rehousing, safe parking and non-congregate shelter resources. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. When the Authority passes on federal funds to subrecipients, federal regulations require the Authority to ensure every subaward agreement clearly identifies that it is a federal award and includes the applicable requirements. Federal regulations require the Authority to include 14 federal award identification elements in each subaward agreement. When passing federal funding to subrecipients, federal regulations also require the Authority to monitor them and ensure they comply with the federal award’s terms and conditions. Description of Condition Our audit found the Authority’s internal controls were ineffective for ensuring it included all 14 required elements in the subaward agreements. Specifically, the Authority did not include the following elements: • Subrecipients’ Unique Entity Identifiers • Federal Award Identification Number (FAIN) • Federal award date • Amount of federal funds obligated • Total amount of the federal award • Name of the federal awarding agency • Assistance Listing Number and program title • All federal program requirements imposed by the pass-through entity • Indirect cost rate We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Authority was recently established and began full-scale operations in 2022. It was still expanding its finance and accounting staff and developing its subrecipient monitoring procedures during the 2023 audit period. The Authority implemented processes and procedures to ensure it included all 14 required elements in any new subaward agreements after receiving the prior audit finding. However, due to staff turnover and technical limitations in its grant management software, the Authority was unable to issue amendments to existing subawards to include these required elements promptly to ensure compliance. Effect of Condition The Authority did not include all the required information in 11 subaward agreements. When subaward agreements do not include the required information, subrecipients are at an increased risk of not knowing they need to comply with specific program requirements, which could lead them to spend the funds for unallowable purposes. Recommendation We recommend the Authority include all required elements in its subrecipient agreements. We also recommend the Authority strengthen its controls to ensure compliance with federal subrecipient monitoring requirements. This should include: • Dedicating the necessary resources and adequately training staff responsible for administering federal programs • Continuing to develop and establish policies and procedures to ensure compliance with subrecipient monitoring requirements Authority’s Response KCRHA agrees with the auditors' recommendations, and the following action will be taken to address the finding: • New grant management software will be implemented in Q4 2024 to significantly reduce error prone manual processes. • Experienced accountants were hired in Q1 and Q2 2024 to replace consultants and build the knowledge and expertise of the KCRHA team and improve controls, policies, and procedures. • Training efforts will continue to enhance team skills and a knowledge base, which will be increasingly effective with a stabilizing workforce. • Certain key positions (e.g., Dir. of Contracts and Compliance) have been and will continue to be added to strengthen the oversight of federal compliance. The Contracts and Compliance teams hired experienced FTE’s in Q2 and Q3. Auditor’s Remarks We thank the Authority for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.