Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: Department of Housing and Urban Development; Department of Veterans Affairs Federal Program Name: Emergency Solutions Grant Program; Veterans Affairs Supportive Services for Veteran Families Program Assistance Listing Number: 14.231; 64.033 Federal Award Identification Number and Year: 14.231: SC-111170-2, CW2254906, CW2259491 64.033: 2020-WA-146-24, 2020-WA-146-25, 20-WA-146-FY24, 20-WA-146-FY25 Pass-Through Agency: 14.231: Pierce County Human Services, City of Tacoma 64.033: N/A – Direct Pass-Through Number(s): 14.231: SC-111170-2, CW2254906, CW2259491 64.033: N/A – Direct Award Period: 14.231: July 1, 2024 – June 30, 2025; November 1, 2022 – December 31, 2024 64.033: October 1, 2019 – September 30, 2026 Criteria or specific requirement: 2 CFR 180.300 indicates that participants must check SAM exclusions, collect a certification form, or add a clause or condition to the covered transaction before entering into a covered transaction. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. 2 CFR 200.318(i) requires recipients of federal funds to "maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price." Condition: For selected procurements, insufficient documentation was available to support the procurement decision, ensure the correct procurement method was used, and to verify open competition. All selected covered transactions had a suspension and debarment check performed during the fiscal year under audit; however, checks should be performed prior to entering into a covered transaction. Questioned costs: Note: all vendors ultimately determined not to be suspended or debarred, therefore questioned costs only apply to procurement samples. Context: 14.231:1/5 selected procurements lacked sufficient documentation to support procurement process; 4/5 selected covered transactions lacked support to evidence suspension and debarment was checked prior to entering into the covered transactions. 64.033: 4/5 selected procurements lacked sufficient documentation to support procurement process; 4/5 selected covered transactions lacked support to evidence suspension and debarment was checked prior to entering into the covered transactions. Cause: There is a misunderstanding that costs that are not directly procured for a federal program may be subject to suspension and debarment checks and a misunderstanding that the full contract cost should be considered when determining if a contract is a covered transaction. There is inadequate document management for historic paper files. There are different processes implemented across the various Divisions, which results in inconsistent application of compliance requirements and controls. Effect: Increased possibility of entering into a covered transaction with vendors/contractors who are federally suspended or debarred or to procure goods and services that are less-than-ideal for the program needs. Repeat Finding: 2024-001 Recommendation: CLA recommends performing suspension and debarment checks on all vendors that may be paid for (even if only in part) with federal funds, if the full value of the contract is likely to exceed $25,000. Additional checks should be performed on a regular basis (recommended annually) so that changes to vendor status are caught timely. This may require modification to organizational policies and training amongst staff who perform procurement activities. CLA also recommends that a consistent procurement process and documentation location be used across all Divisions to ensure documentation to support procurement decisions is accessible and maintained. Updated procurement decisions should be documented at the initiation of any new procurements, as well as before entering into any substantial amendments to existing contracts/agreements. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal Agency: Department of Housing and Urban Development; Department of Veterans Affairs Federal Program Name: Emergency Solutions Grant Program; Veterans Affairs Supportive Services for Veteran Families Program Assistance Listing Number: 14.231; 64.033 Federal Award Identification Number and Year: 14.231: HCS-24-31-2401-007, HCS-23-32-2301-007, HCS-24-32-2401-007, SC-111170, CW2254906, CW2259491, SC-111171 64.033: 20-WA-146 - 10/1/23-9/30/26, 2020-WA-146-LT - 8/19/22-9/30/26 Pass-Through Agency: 14.231: Snohomish County Office of Housing, Homelessness & County Development, City of Tacoma, Pierce County Human Services 64.033: N/A – Direct Pass-Through Number(s): 14.231: HCS-24-31-2401-007, HCS-23-32-2301-007, HCS-24-32-2401-007, SC-111170, SC-111171, CW2259491, CW2254906 64.033: N/A – Direct Award Period: 14.231: July 1, 2024 – June 30, 2025; October 1, 2023 – September 30, 2024; October 1, 2024 – September 30, 2025; November 1, 2022 – December 31, 2024; July 1, 2024 – June 30, 2026 64.033: October 1, 2023 – September 30, 2026; August 19, 2022 – September 30, 2026 Criteria or specific requirement: 2 CFR 200.430(g)(1) - "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated." Condition: 14.231: 2 of 40 payroll expenditures tested was not subject to the timely use of internal control process that reasonably assures that the payroll charges were accurate, allowable, and properly allocated. For 64.033, there was 2 of 40 payroll expenditures tested that lacked appropriate and timely review. In total, there were 4/80 payroll transactions that lacked adequate documentation of the key control. Questioned costs: None Context: 14.231: During testing of payroll disbursements CLA noted that one employee's timecard was not approved by a manager for one pay period in September 2024. The internal control was eventually performed in November 2024, 44 days after CLA would expect to see management review & approval of the employees’ timecard. A second employee's timecard showed timecard review but not approval. 64.033: During testing of payroll disbursements CLA noted that 2 samples had timecards that were not subject to timely review & approval (lack of internal control). Cause: The lack of timely approval appears to have occurred due to an oversight by the person responsible for performing the internal control. Additionally, there was no internal process for ensuring that the internal control was performed by a different employee if the original employee responsible for performing the control separated from the entity. Upon separation of a manager who is responsible for performing this control, a temporary manager with sufficient knowledge of the employee's work, programs worked, and program requirements should be assigned to perform the control to ensure compliance with allowable costs and accurate billing of payroll expenses. Effect: Inadequate allocation of wages to federal programs may result in noncompliance with grant regulations. This can also lead to overcharging the federal grant, which may result in penalties or repayment obligations. Repeat Finding: 2024-002 Recommendation: CLA recommends implementing a process that ensures the control is performed timely by an alternative employee with sufficient understanding of the program requirements to accurately review and approve cost allocations that meet documented time and effort spent on each program. This will include ensuring an appropriate timesheet reviewer is assigned, and that an appropriate back-up reviewer is available. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal Agency: Department of Veterans Affairs Federal Program Name: Veterans Affairs Supportive Services for Veteran Families Program Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 20-WA-146-25; 20-WA-146-LT Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 20-WA-146-25: October 1, 2023 – September 30, 2026; 20-WA-146-LT: August 19, 2022 – September 30, 2026 Criteria or specific requirement: 2 CFR 200.303 requires recipients of federal funds to "establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statues, regulations, and terms and conditions of the Federal award." Condition: During testing of cash management and indirect costs, all 5 samples of reimbursement request invoices tested from the King County Division lacked evidence of approval by the Finance Director. The 3 additional samples tested from another Division had evidence of review on the invoices. Questioned costs: None. Context: Each Division implements different procedures and controls related to compliance. For the King County Division, the Finance Director was tasked with reviewing the monthly reimbursement request and the corresponding indirect cost calculations via her review of monthly financials. However, that review was not documented during the year therefore there was not any key control in place. The Director of Federal Compliance was the only one who prepares and request the drawdowns without any oversight; however, this did not result in noncompliance. Cause: There are different processes implemented across the various Divisions, which results in inconsistent application of compliance requirements and controls. Effect: Increased possibility of requesting reimbursement for costs that are unallowable to the program, and for misapplying the indirect cost rate due to human error. Repeat Finding: 2024-003 Recommendation: CLA recommends applying a consistent review process of reimbursement requests across all programs and Divisions, to the extent possible, to reduce the likelihood of missed application of controls in regard to cash management and indirect cost application. Views of responsible officials: There is no disagreement with the audit finding.