Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2021 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Uniform Guidance requires the auditee to prepare a complete and accurate Schedule of Expenditures of Federal Awards, including the identification of all federal awards expended during the period (2 CFR §200.508(b)). In addition, Uniform Guidance requires the auditee to establish and maintain effective internal control over compliance to provide reasonable assurance that federal awards are identified, tracked, and reported in accordance with applicable statutes, regulations, and the terms and conditions of the federal award (2 CFR §200.303). Condition: The auditee did not have effective internal control over compliance related to the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Specifically, controls were not sufficient to ensure that all federal awards subject to Uniform Guidance requirements were properly identified, Assistance Listing Numbers were accurately determined, and federal expenditures were completely and accurately reported on the SEFA. As a result, material federal awards were omitted from the auditee‑prepared SEFA and errors in federal program identification occurred, which required identification and correction by the auditors. Context: The Schedule of Expenditures of Federal Awards is used to determine major programs and the scope of compliance testing under the Single Audit. Complete and accurate identification of federal awards is critical to ensure appropriate major program determination and compliance coverage. Cause: The auditee had not established formal procedures or an effective review process to ensure that all federal awards were identified and accurately reported on the SEFA. In addition, prior‑year omissions of federal awards were not adequately remediated, contributing to continued deficiencies in SEFA preparation and review. Effect: This significant deficiency resulted in a reasonable possibility that material noncompliance with federal reporting requirements would not be prevented or detected on a timely basis. An incomplete or inaccurate SEFA increases the risk of improper major program determination, inappropriate audit scope, and increased risk of material noncompliance with federal award requirements. Repeat Finding: Yes. Recommendation: We recommend that management design and implement effective internal controls over compliance related to SEFA preparation, including assigning responsibility to personnel with appropriate training in federal award requirements. Management should also implement a documented review process, performed by a knowledgeable individual, to ensure the SEFA is complete, accurate, and compliant with Uniform Guidance prior to submission for audit. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance permits advance payments; however, advance payments must be limited to the minimum amounts needed and timed to meet the immediate cash requirements of the recipient (2 CFR §200.305(b)(1)). In addition, Uniform Guidance requires non‑Federal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that the award is being managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR §200.303). Condition: The auditee billed the Washington State Department of Commerce for the Emergency Rental Assistance Program (ERA2) and received federal funding totaling $8,674,165.38 over the life of the grant. While total eligible expenditures incurred over the life of the grant exceeded this amount, billing activity occurred in advance of eligible expenditures at certain points during the grant period. As a result, the auditee received federal funds in advance of incurring allowable expenditures, resulting in excess federal cash on hand of $47,833.36 at the time of billing. Context: The Emergency Rental Assistance Program (ERAP 2.0) allows for a combination of advance payments and cost‑reimbursement payments. As a result, recipients must maintain controls to ensure that advances are limited to immediate cash needs and reconciled to eligible expenditures incurred Cause: The auditee did not have sufficient procedures in place to ensure that federal reimbursement requests and advance payments were limited to actual eligible expenditures incurred as of the billing date and that excess advances were timely identified and monitored. Effect: The auditee’s billing practices resulted in the receipt of federal funds in advance of incurring allowable costs, which constitutes noncompliance with Uniform Guidance cash‑management requirements. This increased the risk that federal funds were not appropriately limited to immediate cash needs and were not timely identified as advances requiring monitoring or deferral. Repeat Finding: No. Recommendation: We recommend that the auditee strengthen controls over grant billing and cash management to ensure that reimbursement requests and advance payments submitted to the pass‑through entity are limited to immediate cash needs and supported by allowable costs incurred as of the billing date, in accordance with Uniform Guidance requirements. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance requires that costs charged to federal awards be allowable, adequately documented, and supported by appropriate authorization (2 CFR §§200.403 and 200.403(g)). In addition, recipients must establish and maintain effective internal control over federal awards to provide reasonable assurance that federal awards are managed in compliance with applicable statutes, regulations, and the terms and conditions of the federal award (2 CFR §200.303). (This finding is reported as a significant deficiency because, although approval and documentation deficiencies were identified and questioned costs resulted, the errors were not pervasive and did not result in material noncompliance with the federal program.) Condition: During testing of general disbursements charged to federal awards, we identified instances in which required controls over authorization and documentation were not followed. Specifically, of the 40 disbursement transactions tested, 7 transactions lacked evidence of appropriate approval, and 1 transaction lacked sufficient receipt or invoice support. These deficiencies resulted in questioned costs totaling $1,465.44. Context: The population consisted of general disbursement transactions charged to federal awards during the audit period. A judgmental sample of 40 disbursement transactions was selected for testing. Of the 40 transactions tested, 7 transactions lacked evidence of appropriate approval and 1 transaction lacked sufficient receipt or invoice support, resulting in questioned costs totaling $1,465.44. No exceptions were expected based on the auditee’s established policies and procedures requiring approval and documentation of expenditures. Cause: Although the auditee has established procedures related to the approval and documentation of disbursements, these procedures were not consistently performed or documented. Management did not consistently ensure that required approvals and supporting documentation were obtained and retained prior to charging costs to federal awards. Effect: As a result of these control deficiencies, certain costs charged to federal awards were not supported by adequate approval or documentation, resulting in questioned costs of $1,465.44. In addition, inconsistent execution of disbursement controls increases the risk that unallowable or unsupported costs may be charged to federal awards and not detected on a timely basis. Repeat Finding: Yes. Recommendation: We recommend that management reinforce the consistent execution and documentation of existing disbursement approval and documentation procedures. This should include ensuring that all expenditures charged to federal awards are appropriately approved and supported by sufficient documentation prior to payment, and that management periodically monitors compliance with these procedures to confirm they are operating as designed. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance 2 CFR §200.430(i) requires that charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed and be supported by a system of internal controls which provides reasonable assurance that charges are accurate, allowable, and properly allocated. Further, 2 CFR §200.303(a) requires the auditee to establish and maintain effective internal control over Federal awards to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The auditee did not maintain adequate internal controls to ensure that employee pay rates charged to Federal awards were appropriately approved and documented. Specifically, documentation supporting management approval of pay rates was not consistently maintained. In addition, for one payroll disbursement tested, the auditee did not maintain a required timesheet supporting the allocation of payroll costs charged to the Federal award, resulting in a lack of adequate time‑and‑effort documentation. Context: All 27 samples lacked payrate approvals and 1 sample of 27 lacked proper timesheet documentation. Cause: Although the auditee has established procedures related to the approval and documentation of disbursements, these procedures were not consistently performed or documented. Management did not consistently ensure that required approvals and supporting documentation were obtained and retained prior to charging costs to federal awards. Effect: The auditee lacked sufficient internal control over payroll costs charged to Federal awards, and payroll costs charged to the Federal award were not fully supported by required time‑and‑effort documentation in one instance. Repeat Finding: Yes. Recommendation: We recommend that the auditee implement procedures to ensure that all employee pay rates charged to Federal awards are appropriately approved and documented, and complete and accurate timesheets or equivalent time‑and‑effort records are maintained for all payroll costs charged to Federal awards. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance 2 CFR §200.302(b) requires non‑Federal entities to maintain effective control over and accountability for Federal awards, including accurate financial reporting. In addition, 2 CFR §200.303(a) requires the auditee to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The grant agreement with the Washington State Department of Commerce further requires that reimbursement requests be submitted in accordance with the approved budget and cost categories. Condition: The client submitted reimbursement requests to the Washington State Department of Commerce using Form 19‑1A; however, the budget line items reported on the Form 19‑1A did not agree to the approved grant budget in all instances tested. Specifically, while the underlying expenditures were allowable and incurred in accordance with the grant agreement, the budget line items selected on the Form 19‑1A were incorrect in every instance tested, resulting in inaccurate budget category reporting to the pass‑through entity. Context: None of Form 19-1A's contain accurate budget line items do not align with the grant or its amendments. Cause: The auditee did not have adequate internal controls in place to ensure that expenditures were consistently and accurately mapped to the correct budget line items when preparing Form 19‑1A reimbursement requests. Specifically, there was no documented review or reconciliation process to verify that the budget categories selected on the Form 19‑1A agreed to the approved grant budget prior to submission. Effect: As a result of this control deficiency, reimbursement requests submitted to the pass‑through entity did not accurately reflect budgeted cost categories, which increases the risk of noncompliance with the terms of the grant agreement. While the costs tested were determined to be allowable, the inaccurate budget allocation could result in improper reporting, increased scrutiny from the grantor, or potential disallowed costs if not corrected. No questioned costs were identified as the expenditures tested were allowable and supported. Repeat Finding: No. Recommendation: We recommend that the auditee implement procedures to ensure that Form 19‑1A reimbursement requests are reviewed prior to submission to confirm that expenditures are charged to the correct approved budget line items. This may include maintaining a reconciliation between the general ledger, the approved grant budget, and the Form 19‑1A, as well as implementing supervisory review and approval of reimbursement submissions. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance requires non‑Federal entities to use documented procurement procedures consistent with applicable federal standards (2 CFR §§200.317–200.327). In addition, Uniform Guidance requires non‑Federal entities to maintain written standards of conduct governing conflicts of interest and organizational conflicts of interest for employees, officers, and agents engaged in the selection, award, and administration of federal awards (2 CFR §200.318(c)(1)). Condition: The auditee did not have a written procurement policy or a written conflict of interest policy in place during the audit period. As a result, the auditee did not have formal, documented procedures to govern procurement activities or to address potential conflicts of interest related to the administration of federal awards. Context: Procurement and conflict of interest are required compliance areas to be evaluated under the OMB Compliance Supplement for the Single Audit. As part of obtaining an understanding of internal control over compliance, the auditors evaluated whether the auditee had established the required written procurement procedures and standards of conduct addressing conflicts of interest. During this evaluation, it was noted that the auditee did not have a written procurement policy or a written conflict of interest policy in place during the audit period. Cause: The auditee has not formally documented or adopted procurement and conflict of interest policies as required by Uniform Guidance. While management performs certain procurement and oversight activities informally, these practices have not been codified into written policies to ensure consistent application and compliance with federal requirements. Effect: The absence of formal procurement and conflict of interest policies increases the risk that procurement activities may not be conducted in accordance with Uniform Guidance requirements and that actual or perceived conflicts of interest may not be appropriately identified, disclosed, or mitigated. Without documented policies, the auditee is at increased risk of noncompliance with federal award requirements related to procurement standards and ethical conduct. Repeat Finding: Yes. Recommendation: We recommend that management develop, adopt, and implement written procurement and conflict of interest policies that comply with Uniform Guidance requirements. These policies should address procurement standards, including methods of procurement and oversight, and establish standards of conduct governing conflicts of interest for employees, officers, and agents involved in the administration of federal awards. Management should also ensure that these policies are communicated to relevant personnel and applied consistently. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.