SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
City of Pullman
January 1, 2022 through December 31, 2022
2022-001 The City did not have adequate internal controls for ensuring compliance with federal suspension and debarment requirements.
Assistance Listing Number and Title: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds
Federal Grantor Name: U.S. Department of the Treasury
Federal Award/Contract Number: 1505-0271
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
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 is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2022, the City spent $1,138,619 in program funds for these activities.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established control programs.
Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must verify this before entering into the contract or purchasing goods and services, and must maintain documentation demonstrating compliance with this federal requirement.
The City has a process to verify the suspension and debarment status of contractors that it pays $25,000 or more, paid all or in part with federal funds. However, the City’s controls were ineffective for ensuring compliance with this requirement. Specifically, the City entered into three new contracts with two contractors in 2022, paid them more than $25,000 for an infrastructure project and did not maintain documentation demonstrating it verified they were not suspended or debarred from participating in federal programs before contracting.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The City experienced turnover in the position responsible for performing suspension and debarment verifications for public works projects and current staff could not locate documentation showing the City performed verification before entering into contracts.
Effect of Condition
The City could not demonstrate it checked for exclusion records at SAM.gov and did not include a clause in the contracts or obtain written certifications from the contractors. The City paid these contractors $1,138,619 in 2022.
Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them.
Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs.
Recommendation
We recommend the City strengthen internal controls to verify all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them. We also recommend the City maintain documentation demonstrating compliance with this requirement.
City’s Response
Although the City could not demonstrate that exclusion records at SAM.gov were reviewed prior to entering into each of the three agreements with two contractors,
• The City of Pullman is a founding member of the newly created Downtown Pullman Association while having a City Councilmember serve on the Executive Board of the organization and was fundamentally aware of activities and operations. The Downtown Pullman Association was in fact newly founded and did not have activities that would create disqualification under suspension or disbarment as proven after notification from the Washington State Auditor’s Office.
• The City of Pullman did complete a suspension and disbarment check on the engineering contractor for Project Downtown in October of 2021 prior to entering into the initial agreement for services on November 16, 2021. The City entered into additional agreements for revised scope of work on January 12, 2022 then again on September 13, 2022. As noted by the Washington State Auditor’s Office, the contractor continued to remain free of suspension or disbarment during the period in question.
As stated by the Washington State Auditor’s Office - the potential effect of this finding was the federal awarding agency could potentially recover funds from contractors that were suspended or debarred and the Known Questioned Cost Amount is zero dollars. After additional discussions city staff has taken the advice of the Washington State Auditor’s Office and created a new set of internal controls to assure that this type of finding does not occur in the future.
Auditor’s Remarks
We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 180, OMB Guidelines on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
City of Pullman
January 1, 2022 through December 31, 2022
2022-001 The City did not have adequate internal controls for ensuring compliance with federal suspension and debarment requirements.
Assistance Listing Number and Title: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds
Federal Grantor Name: U.S. Department of the Treasury
Federal Award/Contract Number: 1505-0271
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
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 is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2022, the City spent $1,138,619 in program funds for these activities.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established control programs.
Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must verify this before entering into the contract or purchasing goods and services, and must maintain documentation demonstrating compliance with this federal requirement.
The City has a process to verify the suspension and debarment status of contractors that it pays $25,000 or more, paid all or in part with federal funds. However, the City’s controls were ineffective for ensuring compliance with this requirement. Specifically, the City entered into three new contracts with two contractors in 2022, paid them more than $25,000 for an infrastructure project and did not maintain documentation demonstrating it verified they were not suspended or debarred from participating in federal programs before contracting.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The City experienced turnover in the position responsible for performing suspension and debarment verifications for public works projects and current staff could not locate documentation showing the City performed verification before entering into contracts.
Effect of Condition
The City could not demonstrate it checked for exclusion records at SAM.gov and did not include a clause in the contracts or obtain written certifications from the contractors. The City paid these contractors $1,138,619 in 2022.
Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them.
Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs.
Recommendation
We recommend the City strengthen internal controls to verify all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them. We also recommend the City maintain documentation demonstrating compliance with this requirement.
City’s Response
Although the City could not demonstrate that exclusion records at SAM.gov were reviewed prior to entering into each of the three agreements with two contractors,
• The City of Pullman is a founding member of the newly created Downtown Pullman Association while having a City Councilmember serve on the Executive Board of the organization and was fundamentally aware of activities and operations. The Downtown Pullman Association was in fact newly founded and did not have activities that would create disqualification under suspension or disbarment as proven after notification from the Washington State Auditor’s Office.
• The City of Pullman did complete a suspension and disbarment check on the engineering contractor for Project Downtown in October of 2021 prior to entering into the initial agreement for services on November 16, 2021. The City entered into additional agreements for revised scope of work on January 12, 2022 then again on September 13, 2022. As noted by the Washington State Auditor’s Office, the contractor continued to remain free of suspension or disbarment during the period in question.
As stated by the Washington State Auditor’s Office - the potential effect of this finding was the federal awarding agency could potentially recover funds from contractors that were suspended or debarred and the Known Questioned Cost Amount is zero dollars. After additional discussions city staff has taken the advice of the Washington State Auditor’s Office and created a new set of internal controls to assure that this type of finding does not occur in the future.
Auditor’s Remarks
We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 180, OMB Guidelines on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
City of Pullman
January 1, 2022 through December 31, 2022
2022-001 The City did not have adequate internal controls for ensuring compliance with federal suspension and debarment requirements.
Assistance Listing Number and Title: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds
Federal Grantor Name: U.S. Department of the Treasury
Federal Award/Contract Number: 1505-0271
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
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 is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2022, the City spent $1,138,619 in program funds for these activities.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established control programs.
Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must verify this before entering into the contract or purchasing goods and services, and must maintain documentation demonstrating compliance with this federal requirement.
The City has a process to verify the suspension and debarment status of contractors that it pays $25,000 or more, paid all or in part with federal funds. However, the City’s controls were ineffective for ensuring compliance with this requirement. Specifically, the City entered into three new contracts with two contractors in 2022, paid them more than $25,000 for an infrastructure project and did not maintain documentation demonstrating it verified they were not suspended or debarred from participating in federal programs before contracting.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The City experienced turnover in the position responsible for performing suspension and debarment verifications for public works projects and current staff could not locate documentation showing the City performed verification before entering into contracts.
Effect of Condition
The City could not demonstrate it checked for exclusion records at SAM.gov and did not include a clause in the contracts or obtain written certifications from the contractors. The City paid these contractors $1,138,619 in 2022.
Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them.
Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs.
Recommendation
We recommend the City strengthen internal controls to verify all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them. We also recommend the City maintain documentation demonstrating compliance with this requirement.
City’s Response
Although the City could not demonstrate that exclusion records at SAM.gov were reviewed prior to entering into each of the three agreements with two contractors,
• The City of Pullman is a founding member of the newly created Downtown Pullman Association while having a City Councilmember serve on the Executive Board of the organization and was fundamentally aware of activities and operations. The Downtown Pullman Association was in fact newly founded and did not have activities that would create disqualification under suspension or disbarment as proven after notification from the Washington State Auditor’s Office.
• The City of Pullman did complete a suspension and disbarment check on the engineering contractor for Project Downtown in October of 2021 prior to entering into the initial agreement for services on November 16, 2021. The City entered into additional agreements for revised scope of work on January 12, 2022 then again on September 13, 2022. As noted by the Washington State Auditor’s Office, the contractor continued to remain free of suspension or disbarment during the period in question.
As stated by the Washington State Auditor’s Office - the potential effect of this finding was the federal awarding agency could potentially recover funds from contractors that were suspended or debarred and the Known Questioned Cost Amount is zero dollars. After additional discussions city staff has taken the advice of the Washington State Auditor’s Office and created a new set of internal controls to assure that this type of finding does not occur in the future.
Auditor’s Remarks
We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 180, OMB Guidelines on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
City of Pullman
January 1, 2022 through December 31, 2022
2022-001 The City did not have adequate internal controls for ensuring compliance with federal suspension and debarment requirements.
Assistance Listing Number and Title: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds
Federal Grantor Name: U.S. Department of the Treasury
Federal Award/Contract Number: 1505-0271
Pass-through Entity Name: N/A
Pass-through Award/Contract Number:
N/A
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 is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2022, the City spent $1,138,619 in program funds for these activities.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established control programs.
Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must verify this before entering into the contract or purchasing goods and services, and must maintain documentation demonstrating compliance with this federal requirement.
The City has a process to verify the suspension and debarment status of contractors that it pays $25,000 or more, paid all or in part with federal funds. However, the City’s controls were ineffective for ensuring compliance with this requirement. Specifically, the City entered into three new contracts with two contractors in 2022, paid them more than $25,000 for an infrastructure project and did not maintain documentation demonstrating it verified they were not suspended or debarred from participating in federal programs before contracting.
We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.
Cause of Condition
The City experienced turnover in the position responsible for performing suspension and debarment verifications for public works projects and current staff could not locate documentation showing the City performed verification before entering into contracts.
Effect of Condition
The City could not demonstrate it checked for exclusion records at SAM.gov and did not include a clause in the contracts or obtain written certifications from the contractors. The City paid these contractors $1,138,619 in 2022.
Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them.
Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs.
Recommendation
We recommend the City strengthen internal controls to verify all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them. We also recommend the City maintain documentation demonstrating compliance with this requirement.
City’s Response
Although the City could not demonstrate that exclusion records at SAM.gov were reviewed prior to entering into each of the three agreements with two contractors,
• The City of Pullman is a founding member of the newly created Downtown Pullman Association while having a City Councilmember serve on the Executive Board of the organization and was fundamentally aware of activities and operations. The Downtown Pullman Association was in fact newly founded and did not have activities that would create disqualification under suspension or disbarment as proven after notification from the Washington State Auditor’s Office.
• The City of Pullman did complete a suspension and disbarment check on the engineering contractor for Project Downtown in October of 2021 prior to entering into the initial agreement for services on November 16, 2021. The City entered into additional agreements for revised scope of work on January 12, 2022 then again on September 13, 2022. As noted by the Washington State Auditor’s Office, the contractor continued to remain free of suspension or disbarment during the period in question.
As stated by the Washington State Auditor’s Office - the potential effect of this finding was the federal awarding agency could potentially recover funds from contractors that were suspended or debarred and the Known Questioned Cost Amount is zero dollars. After additional discussions city staff has taken the advice of the Washington State Auditor’s Office and created a new set of internal controls to assure that this type of finding does not occur in the future.
Auditor’s Remarks
We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 180, OMB Guidelines on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.