Audit 362973

Identification of the federal program: 97.036 – Disaster Grants – Public Assistance Noncompliance and material weakness in internal controls over allowable activities, allowable costs and period of performance. Criteria: Procedures should be implemented to ensure all materials taken from inventory and charged to the grant are appropriately tracked and supporting documentation is maintained. In addition, internal controls should be present to ensure there is appropriate review and approval of charges made to the grant. Condition: Materials charged to the grant were not adequately tracked and internal controls were not in place to ensure only items used on the project were charged to the grant. Cause: The Cooperative did not have a structured process for tracking, reviewing, and approving materials removed from inventory, leading to gaps in oversight and control. Effect: Without proper tracking and approval procedures, the Cooperative risks charging unallowable or unsupported costs to the grant. Questioned Costs: $137,075 Recommendations: The Cooperative should implement and follow a proper materials tracking system that ensures all materials taken from inventory are properly documented and approved for use. Views of responsible officials: We used our standard process for charging out materials and did a physical inventory count. We do believe that we have properly charged this project for the appropriate materials used. However, to avoid this in the future, we are implementing a new process for physically setting aside the materials and having a second sign-off on material sheets.

Identification of the federal program: 97.036 – Disaster Grants – Public Assistance Significant deficiency in internal controls over allowable activities, allowable costs, and period of performance. Criteria: Proper oversight, review procedures, and controls should be established to ensure the amounts submitted for equipment hours are adequately supported. Condition: Equipment hours were tracked by one individual within the Cooperative and no review or approval of the equipment hours occurred. Cause: There was a lack of review of equipment hours charged to the grant. Effect: The absence of proper review procedures increases the risk of errors, inaccuracies, or omissions in submitted expenses. Questioned Costs: None Recommendations: The Cooperative should establish oversight and review procedures to ensure all equipment hours are properly submitted by employees and reviewed by management prior to the submission of them for reimbursement. Views of responsible officials: The Controller captured the time associated with each piece of equipment via individual meetings with each employee. Moving forward we have set up to have equipment usage captured within the timesheets by each employee. Timesheets are then approved by the supervisor.

Identification of the federal program: 97.047 – Building Resilient Infrastructure and Communities (BRIC) Noncompliance and material weakness in internal controls over allowable activities, allowable costs and period of performance. Criteria: Proper oversight, review procedures and controls should be established to ensure the amounts submitted for equipment hours are adequately supported. Condition: The Cooperative uses an Excel spreadsheet to track equipment hours. No backup documentation was maintained to support the equipment or the number of hours shown on the Excel spreadsheet and ultimately charged to the grant. Cause: There was lack of proper submission and review of equipment hours charged to the grant. Effect: The absence of supporting documentation and proper review procedures increases the risk of errors, inaccuracies, or omissions in submitted expenses. Questioned Costs: $298,940 Recommendations: The Cooperative should establish oversight and review procedures to ensure all equipment hours are properly submitted by employees and reviewed by management prior to the submission of them for reimbursement. In addition, the Cooperative should develop documentation standards to comply with retention policies. Views of responsible officials: During the Alderwood work, our operations manager tracked equipment usage and reported it to the accounting department. FEMA rates were used based on the hours provided. Moving forward we have set up to have equipment usage captured within the timesheets by each employee. Timesheets are then approved by the supervisor.

Identification of the federal program: 97.047 – Building Resilient Infrastructure and Communities (BRIC) Noncompliance with procurement, suspension, debarment, and significant deficiency in internal controls. Criteria: 2 CFR Part 200.320(a)(2)(i) indicates “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-federal entity.” Condition: The Cooperative did not retain documentation for price quotes obtained for small purchases for two of the three vendors tested. Cause: The Cooperative did not retain documentation of quote gathering as the conversations happened verbally. Effect: By not obtaining price or rate quotations, the Cooperative may pay more for goods and services than is necessary. Questioned Costs: $149,630 Recommendations: The Cooperative should establish and follow procurement policies and procedures to ensure the Cooperative adheres to requirements established by the federal government. Views of responsible officials: We did not obtain multiple price quotes for small purchases for two of the three vendors. We did, however, use the vendors we use in daily operations and the amount of the questioned costs is greater than the amount paid on the small purchases that did not follow proper procurement.

Identification of the federal program: 97.047 – Building Resilient Infrastructure and Communities (BRIC) Noncompliance with period of performance and significant deficiency in internal controls Criteria: According to the grant agreement, all funds must be expended only within the authorized period of performance as outlined in the agreement. Any costs incurred outside this timeframe are considered unallowable. Condition: The Cooperative did not have proper review processes in place to ensure all amounts for an invoice fall within the period of performance. Cause: The Cooperative did not ensure all expenditures submitted for reimbursement fell within the period of performance. Effect: The Cooperative submitted costs for reimbursement that occurred prior to the period of performance starting. Questioned Costs: $11,537 Recommendations: The Cooperative should establish and follow internal controls policies to ensure all amounts within an invoice are within the period of performance prior to the approval of submission for reimbursement. Views of responsible officials: This expenditure being outside of the period of award was discovered immediately following the submission of request for reimbursement #2 and subsequently deducted from request for reimbursement #3. The period of performance was not easily identifiable and different agencies provided different date ranges. Moving forward we will get the period of performance in writing.

Identification of the federal program: 97.036 – Disaster Grants – Public Assistance Noncompliance and material weakness in internal controls over allowable activities, allowable costs and period of performance. Criteria: Procedures should be implemented to ensure all materials taken from inventory and charged to the grant are appropriately tracked and supporting documentation is maintained. In addition, internal controls should be present to ensure there is appropriate review and approval of charges made to the grant. Condition: Materials charged to the grant were not adequately tracked and internal controls were not in place to ensure only items used on the project were charged to the grant. Cause: The Cooperative did not have a structured process for tracking, reviewing, and approving materials removed from inventory, leading to gaps in oversight and control. Effect: Without proper tracking and approval procedures, the Cooperative risks charging unallowable or unsupported costs to the grant. Questioned Costs: $137,075 Recommendations: The Cooperative should implement and follow a proper materials tracking system that ensures all materials taken from inventory are properly documented and approved for use. Views of responsible officials: We used our standard process for charging out materials and did a physical inventory count. We do believe that we have properly charged this project for the appropriate materials used. However, to avoid this in the future, we are implementing a new process for physically setting aside the materials and having a second sign-off on material sheets.

Identification of the federal program: 97.036 – Disaster Grants – Public Assistance Significant deficiency in internal controls over allowable activities, allowable costs, and period of performance. Criteria: Proper oversight, review procedures, and controls should be established to ensure the amounts submitted for equipment hours are adequately supported. Condition: Equipment hours were tracked by one individual within the Cooperative and no review or approval of the equipment hours occurred. Cause: There was a lack of review of equipment hours charged to the grant. Effect: The absence of proper review procedures increases the risk of errors, inaccuracies, or omissions in submitted expenses. Questioned Costs: None Recommendations: The Cooperative should establish oversight and review procedures to ensure all equipment hours are properly submitted by employees and reviewed by management prior to the submission of them for reimbursement. Views of responsible officials: The Controller captured the time associated with each piece of equipment via individual meetings with each employee. Moving forward we have set up to have equipment usage captured within the timesheets by each employee. Timesheets are then approved by the supervisor.

Identification of the federal program: 97.047 – Building Resilient Infrastructure and Communities (BRIC) Noncompliance and material weakness in internal controls over allowable activities, allowable costs and period of performance. Criteria: Proper oversight, review procedures and controls should be established to ensure the amounts submitted for equipment hours are adequately supported. Condition: The Cooperative uses an Excel spreadsheet to track equipment hours. No backup documentation was maintained to support the equipment or the number of hours shown on the Excel spreadsheet and ultimately charged to the grant. Cause: There was lack of proper submission and review of equipment hours charged to the grant. Effect: The absence of supporting documentation and proper review procedures increases the risk of errors, inaccuracies, or omissions in submitted expenses. Questioned Costs: $298,940 Recommendations: The Cooperative should establish oversight and review procedures to ensure all equipment hours are properly submitted by employees and reviewed by management prior to the submission of them for reimbursement. In addition, the Cooperative should develop documentation standards to comply with retention policies. Views of responsible officials: During the Alderwood work, our operations manager tracked equipment usage and reported it to the accounting department. FEMA rates were used based on the hours provided. Moving forward we have set up to have equipment usage captured within the timesheets by each employee. Timesheets are then approved by the supervisor.

Identification of the federal program: 97.047 – Building Resilient Infrastructure and Communities (BRIC) Noncompliance with procurement, suspension, debarment, and significant deficiency in internal controls. Criteria: 2 CFR Part 200.320(a)(2)(i) indicates “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-federal entity.” Condition: The Cooperative did not retain documentation for price quotes obtained for small purchases for two of the three vendors tested. Cause: The Cooperative did not retain documentation of quote gathering as the conversations happened verbally. Effect: By not obtaining price or rate quotations, the Cooperative may pay more for goods and services than is necessary. Questioned Costs: $149,630 Recommendations: The Cooperative should establish and follow procurement policies and procedures to ensure the Cooperative adheres to requirements established by the federal government. Views of responsible officials: We did not obtain multiple price quotes for small purchases for two of the three vendors. We did, however, use the vendors we use in daily operations and the amount of the questioned costs is greater than the amount paid on the small purchases that did not follow proper procurement.

Identification of the federal program: 97.047 – Building Resilient Infrastructure and Communities (BRIC) Noncompliance with period of performance and significant deficiency in internal controls Criteria: According to the grant agreement, all funds must be expended only within the authorized period of performance as outlined in the agreement. Any costs incurred outside this timeframe are considered unallowable. Condition: The Cooperative did not have proper review processes in place to ensure all amounts for an invoice fall within the period of performance. Cause: The Cooperative did not ensure all expenditures submitted for reimbursement fell within the period of performance. Effect: The Cooperative submitted costs for reimbursement that occurred prior to the period of performance starting. Questioned Costs: $11,537 Recommendations: The Cooperative should establish and follow internal controls policies to ensure all amounts within an invoice are within the period of performance prior to the approval of submission for reimbursement. Views of responsible officials: This expenditure being outside of the period of award was discovered immediately following the submission of request for reimbursement #2 and subsequently deducted from request for reimbursement #3. The period of performance was not easily identifiable and different agencies provided different date ranges. Moving forward we will get the period of performance in writing.