Audit 381040

Finding 2022-004: Inadequate Internal Controls over Compliance Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.027 Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Pass-through Entity: Snohomish County Human Services Pass-through Award Number: EL-22-AR-11-394 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over federal awards. Condition: During the year ended December 31, 2022, the Organization lacked sufficient internal controls over various federal awards processes surrounding compliance requirements for activities allowed or unallowed, allowable costs/cost principles, procurement and suspension and debarment, and reporting. We have determined this to be a material weakness in internal control over compliance. Cause: The Organization had limited management and administrative staff during the year ended December 31, 2022. Further, as described in finding 2022-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: Inadequate controls could lead to noncompliance with compliance requirements that are material to the Organization, which may ultimately result in decreased funding for the Organization. Recommendation: We recommend that management develops and implements internal controls over compliance with federal awards in accordance with the requirements of the Uniform Guidance. Views of Responsible Officials: There is no disagreement with the finding.

Finding 2022-005: Insufficient Support for Costs Charged to Federal Award Programs Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.027 Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Pass-through Entity: Snohomish County Human Services Pass-through Award Number: EL-22-AR-11-394 Criteria: Under 2 CFR 200.334, financial records and other supporting documents must be retained for a period of three years from the date of the submission of the annual financial report. Condition: Invoices, check copies, and other source documents could not be located to support the allowability of the costs charged to the major federal award program. Cause: The Organization had limited management and administrative staff and did not utilize a formal recordkeeping system during the year ended December 31, 2022. Further, as described in finding 2022-001, there were no written policies and procedures in place. Effect: Inadequate source documentation for costs charged to federal award programs may lead to findings in monitoring performed by oversight agencies and potential disallowed costs and/or decreases in future federal funding. Questioned Costs: Source documents could not be located for costs totaling $99,444, which represents 50% of our sample of transactions tested. Recommendation: We recommend that management implements and follows a formal record retention policy and retains receipts, invoices, and other source documents for costs charged to federal awards for a period of at least three years from the date the final financial report is submitted. Views of Responsible Officials: There is no disagreement with the finding.

Finding 2022-006: Procurement Method Requirements Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.027 Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Pass-through Entity: Snohomish County Human Services Pass-through Award Number: EL-22-AR-11-394 Criteria: In accordance with 2 CFR 200.320, federal award recipients are required to use informal procurement methods for procurement transactions between $10,000 and $250,000 that are charged to federal award programs. Condition: Records of the procurement method used, such as price or rate quotations or justification for noncompetitive procurement, could not be located for procurement transactions. Cause: The Organization had limited management and administrative staff during the year ended December 31, 2022. Further, as described in finding 2022-001, there were no written procedures in place to assign specific tasks to separate individuals. Effect: The Organization was not in compliance with procurement requirements for the major federal award program during the year ended December 31, 2022, noncompliance with which could lead to waste of federal award funds through purchases of overpriced goods or services. Questioned Costs: Procurement documents could not be located for any of the procurement transactions or covered transactions tested, which totaled $176,381. Recommendation: We recommend that management implements and follows a formal procurement policy with requirements to obtains price or rate quotations for all purchases over $10,000 and to obtain sealed bids or competitive proposals for purchases over $250,000. Views of Responsible Officials: There is no disagreement with the finding.