Corrective Action Plans

Finding 1200642 (2025-041)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Questioned Costs

Finding Number: 2025-041 Finding: The Health Care Authority improperly charged $5,634,756 to the Medicaid Program. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID...

Finding Number: 2025-041 Finding: The Health Care Authority improperly charged $5,634,756 to the Medicaid Program. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $5,634,756 Status: Corrective action in progress Corrective Action: The Authority concurs with the finding. The Authority identified the error prior to the audit and added a review of the payment methodology to ProviderOne regression testing scenarios for future years to prevent the error from reoccurring. The Authority is in the process of recouping funds from providers and returning the federal share of the payments. The Authority will work with the Centers for Medicare & Medicaid Services to confirm the funds were returned. Prior Findings: None Completion Date: Estimated July 2026 Agency Contact: Kari Summerour, CPA External Audit Compliance Manager (360) 725-9586 Kari.Summerour@hca.wa.gov

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Finding 1200641 (2025-040)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Special Tests & Provisions Allowable Costs / Cost Principles

Finding Number: 2025-040 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with managed care financial audit requirements. Program: 93.767 – Children's Health Insurance Program 93.767 – COVID-19 Children's Health Insurance Program 93.775 – State Medic...

Finding Number: 2025-040 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with managed care financial audit requirements. Program: 93.767 – Children's Health Insurance Program 93.767 – COVID-19 Children's Health Insurance Program 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Managed Care Financial Audit Questioned Costs: $0 Status: Corrective action complete Corrective Action: In January 2025, the Authority implemented new contract language requiring Managed Care Organizations (MCOs) to submit audited financial reports in accordance with Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing Standards (GAAS). MCOs are required to submit the GAAP and GAAS statements beginning with the June 2026 submission. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-074, 2023-073, 2022-054, and 2021-048. Completion Date: January 2025 Agency Contact: Kari Summerour, CPA External Audit Compliance Manager (360) 725-9586 Kari.Summerour@hca.wa.gov

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Finding 1200640 (2025-039)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Procurement, Suspension & Debarment Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-039 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with federal provider eligibility requirements for the Medicaid and Children’s Health Insurance Program. Program: 93.767 – Children’s Health Insurance Program 93.767 – COVID-19...

Finding Number: 2025-039 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with federal provider eligibility requirements for the Medicaid and Children’s Health Insurance Program. Program: 93.767 – Children’s Health Insurance Program 93.767 – COVID-19 Children’s Health Insurance Program 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Provider Eligibility (Screening and Enrollment) Questioned Costs: $641 Status: Corrective action in progress Corrective Action: The Authority partially concurs with the finding. Fingerprint based criminal background checks The Authority concurs that a fingerprint-based criminal background check process for high-risk providers was not implemented during the audit period. In coordination with the Centers for Medicare & Medicaid Services (CMS) and the Washington State Patrol, the Authority has developed the required process and is in the final stages of implementation. The program is expected to be launched by March 31, 2026, and will apply to all providers designated as high-risk. Updated license information in ProviderOne When a professional license on a provider record expires, ProviderOne automatically end-dates taxonomies associated with the provider. However, when a provider is enrolled with multiple agencies and only one associated license has expired, the system does not currently end-date the related taxonomies. Currently, 37 of 113,940 servicing-only providers are affected while none of the approximately 9,000 billing providers are impacted. The Authority submitted a system change request in March 2026 to ensure applicable taxonomies are automatically end-dated in these scenarios. In the interim, the Authority developed a weekly report and implemented a process to identify providers with applicable taxonomies that need manually end-dated until the system enhancement is deployed. ProviderOne did not deactivate providers timely ProviderOne is designed to automatically inactivate a provider’s domain when revalidation is not completed timely. Due to an operational issue, a limited number of providers were not deactivated as required. Currently, 50 of approximately 9,000 billing providers are impacted. The Authority submitted a system change request in March 2026 to remediate this issue and prevent recurrence. In the interim, the Authority will conduct weekly monitoring and manually inactivate affected provider domains until the system correction is implemented. Ownership disclosures The Authority does not concur with the determination that it is not in compliance with federal requirements governing ownership disclosures. The Authority’s process requires providers to review and attest to ownership disclosure information maintained by the Authority as part of the revalidation process. The Authority believes this process meets the requirements of 42 CFR 455.104 and appropriately balances regulatory compliance with administrative efficiency. The Authority submitted its procedures to CMS on February 23, 2026, and requested clarification and guidance to ensure continued alignment with federal expectations. Providers not revalidated or deactivated by the five-year deadline The Authority’s revalidation backlog totaled 792 providers in July 2024. Through focused operational improvements and targeted resource deployment, the backlog was substantially reduced to three providers as of June 30, 2025. The Authority remains committed to continuous process improvement to sustain timely revalidations and prevent future backlog growth. As of March 2026, the Authority began working on a daily report of providers nearing the revalidation deadline so they can be prioritized and revalidated timely. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-075, 2023-074, 2022-055, 2021-047, 2020-046, 2019-048, 2018-042, 2017-033, and 2016-035. Completion Date: Estimated March 2026 Agency Contact: Kari Summerour, CPA External Audit Compliance Manager (360) 725-9586 Kari.Summerour@hca.wa.gov

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Finding 1200539 (2025-035)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Matching / Level of Effort / Earmarking Allowable Costs / Cost Principles Period of Performance

Finding Number: 2025-035 Finding: The Department of Children, Youth, and Families improperly charged $543,205 to the Child Care Development Fund program. Program: 93.575 – Child Care and Development Block Grant 93.575 – COVID-19 Child Care and Development Block Grant 93.596 – Child Care Mandatory an...

Finding Number: 2025-035 Finding: The Department of Children, Youth, and Families improperly charged $543,205 to the Child Care Development Fund program. Program: 93.575 – Child Care and Development Block Grant 93.575 – COVID-19 Child Care and Development Block Grant 93.596 – Child Care Mandatory and Matching Funds of the Child Care and Development Fund Compliance Requirement: Period of Performance Questioned Costs: $543,205 Status: Corrective action not taken Corrective Action: The Department does not agree with the State Auditor’s Office (SAO) finding that $543,205 in expenditures were improperly charged to the Child Care and Development Fund (CCDF) grants during fiscal year 2025. The Department utilizes grant-level management for all federal funds and makes grant adjustments between allowable grant sources to properly spend grant dollars within the allowable period of performance. The questioned costs reported by the auditors were proper charges and met period of performance requirements, as follows: • $169,052 were expenditures charged to the CCDF grant prior to the grant start date but were later corrected in state fiscal year 2026. The Department provided documentation showing the adjustment, but it was not considered by SAO because the correction occurred outside the audit period. • $6,152 were questioned costs for the federal fiscal year 2024 CCDF grant which were applied as offset to recoveries in the correct period. All funds were appropriately documented and returned to the federal grantor as evidenced in the quarterly claims. Expenditures were obligated and expended within the allowable grant period. • $368,001 were initial expenditures recorded in the proper liquidation period that were charged to the CCDF Discretionary grant. The Department then processed an accounting adjustment in September 2024 to leverage the available grants’ funds per our grant-level management practice. Although the adjustment was processed in calendar month October 2024, it was recorded in the proper fiscal month in accordance with state financial reporting standards. When the Department of Health and Human Services (HHS) issues a management decision letter for the fiscal year 2025 finding, the Department will work with HHS and follow the audit resolution process. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-058, 2023-061, 2022-043, 2021-037, and 2020-041. Completion Date: Not applicable Agency Contact: Stefanie Niemela External Audit Liaison (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 1200538 (2025-034)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring

Finding Number: 2025-034 Finding: The Department of Children, Youth, and Families improperly charged $9,980 to the Child Care and Development Fund. Program: 93.575 – Child Care and Development Block Grant 93.575 – COVID-19 Child Care and Development Block Grant 93.596 – Child Care Mandatory and Matc...

Finding Number: 2025-034 Finding: The Department of Children, Youth, and Families improperly charged $9,980 to the Child Care and Development Fund. Program: 93.575 – Child Care and Development Block Grant 93.575 – COVID-19 Child Care and Development Block Grant 93.596 – Child Care Mandatory and Matching Funds of the Child Care and Development Fund Compliance Requirement: Eligibility Questioned Costs: $9,980 Status: Corrective action complete Corrective Action: The Department concurs that federal funds were incorrectly used for one client who should have been paid with state funds. As stated in the finding, all clients sampled for audit testing met the eligibility requirements for the Working Connections Child Care program, meaning they were deemed eligible for subsidy payment. However, one client that was determined to be eligible for state funding was paid with federal funds. This was the result of a system coding error in the Payment Allocation Model (PAM) process that led to the wrong source of funds being used for the client. In November 2025, the Department corrected the PAM coding to prevent further occurrences of this specific error. In February 2026, the Department: • Processed an accounting adjustment returning the federal funds that were paid by error to the Child Care and Development Fund grant. • Implemented a monthly quality assurance review process in collaboration with the Department of Social and Health Services where a sample of PAM allocations will be reviewed for accuracy. Prior Findings: None Completion Date: February 2026 Agency Contact: Stefanie Niemela External Audit Liaison (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 1200537 (2025-033)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Subrecipient Monitoring Matching / Level of Effort / Earmarking

Finding Number: 2025-033 Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure payments to child care providers for the Child Care and Development Fund program were allowable and properly supported. Progra...

Finding Number: 2025-033 Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure payments to child care providers for the Child Care and Development Fund program were allowable and properly supported. Program: 93.575 – Child Care and Development Block Grant 93.575 – COVID-19 Child Care and Development Block Grant 93.596 – Child Care Mandatory and Matching Funds of the Child Care and Development Fund Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,827 Status: Corrective action in progress Corrective Action: The Department agrees with the 11 audit exceptions identified by the State Auditor’s Office resulting from testing of attendance records and documentation from providers. In February 2026, the Department wrote overpayments for the exceptions identified and submitted them for recovery to the Department of Social and Health Services, Office of Financial Recovery. The Department will: • Develop a decision package to request funding for options to increase internal controls for provider payments. • Update the Child Care Subsidy Program Integrity Plan and the quality assurance audit procedures to align with current practices. When the Department of Health and Human Services (HHS) issues a management decision letter for the fiscal year 2025 finding, the Department will work with HHS and follow the audit resolution process. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-056, 2023-058, 2022-041, 2021-033, 2020-038, 2019-035, 2018-034, 2017-024, 2016-021, 2015-023, 2014-023, 2013-016, 12-28, 11-23, 10-31, 9-12, and 8-13. Completion Date: Estimated October 2026 Agency Contact: Stefanie Niemela External Audit Liaison (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 1200489 (2025-004)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-004 Finding: The University of Washington did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Research & Development programs received required single audits, and that it appropriately followed up on findings a...

Finding Number: 2025-004 Finding: The University of Washington did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Research & Development programs received required single audits, and that it appropriately followed up on findings and issued management decisions. Program: Research and Development Cluster Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The University’s Office of Sponsored Programs uses an Excel workbook to track subrecipients’ single audits and identify any findings related to university subawards. In early 2025, the University began transitioning to a new tracking spreadsheet with updated fields to capture relevant data for each subrecipient. The University is working on completing this transition and ensuring that all subrecipients with expenditures in the last fiscal year are included. To address the audit recommendations, the University will strengthen internal controls over subrecipient monitoring by: • Obtaining annual single audit reports timely for review and to follow up with subrecipients as needed. • Maintaining required information on the tracking sheet, including documentation of review of single audit reports. • Developing a schedule to obtain subrecipients’ single audit reports from the Federal Audit Clearinghouse to identify subrecipients with single audit findings related to university subawards. • Ensuring written management decisions are issued for all applicable audit findings within the required timeframe. Prior Findings: None Completion Date: Estimated July 2026 Agency Contact: Erick Winger Controller (206) 543-5322 erickw@uw.edu

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Finding 1200133 (2025-010)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring

Finding Number: 2025-010 Finding: The University of Washington did not have adequate internal controls over and did not comply with federal requirements to ensure salaries and wages charged to federal awards for the Research and Development programs were allowable and adequately supported. Program: ...

Finding Number: 2025-010 Finding: The University of Washington did not have adequate internal controls over and did not comply with federal requirements to ensure salaries and wages charged to federal awards for the Research and Development programs were allowable and adequately supported. Program: Research and Development Cluster Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $17,191 Status: Corrective action in progress Corrective Action: As of February 2026, the payroll exceptions identified by the auditors were reviewed by the applicable principal investigator and effort certification statements were completed. To address the audit recommendations, the University will strengthen internal controls and take the following corrective actions: • Expand the escalation process for past-due certifications to involve the University’s senior level leadership. • Implement enforcement procedures in instances of non-compliance such as limiting access to funding or restricting proposal submission. • Develop additional training on reporting and effort certification tools, and implement a process for the central office to establish and track retraining requirements. • Improve automated system notifications for effort coordinators and certifiers. The University will notify federal grantor(s) for each exception to provide an update on the resolution of the exception and the status of the corrective action plan. Prior Findings: None Completion Date: Estimated June 2026 Agency Contact: Erick Winger Controller (206) 543-5322 erickw@uw.edu

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Finding 1191973 (2025-038)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring

Finding Number: 2025-038 Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure payments to providers were allowable and properly supported for the Social Services Block grant. Program: 93.667 – Social Services Block Grant Compliance Requirement: A...

Finding Number: 2025-038 Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure payments to providers were allowable and properly supported for the Social Services Block grant. Program: 93.667 – Social Services Block Grant Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Period of Performance Questioned Costs: $1,872,842 Status: Corrective action complete Corrective Action: The Department does not agree that expenditures were improperly charged to the Social Services Block Grant (SSBG) program during fiscal year 2025. Since November 2024, the Department has limited journal voucher (JV) activities and manually processed these transfer JVs at the transaction-level by grant funding sources. This action was taken in response to prior year’s audit concern that the SSBG program was not auditable without transaction-level data. The amount of questioned costs reported on this audit finding were based on the following JVs that were processed by the Department during the fiscal year: • $1,419,561 were grant level adjustments made for allowable activities per the SSBG expenditure plan. • $505,707 was a portion of an accrual JV that the Department processed during the 2025 state fiscal year close and represented an estimate of the amount the Department may spend within the allowable timeframe, not the actual amount charged to the grant. Accruals are estimated outstanding costs that are included as part of the state’s year end closing process. When the Department of Health and Human Services (HHS) issues a management decision letter for the fiscal year 2025 finding, the Department will work with HHS and follow the audit resolution process. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-072 and 2023-070. Completion Date: February 2026 Agency Contact: Stefanie Niemela External Audit Liaison (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 1191971 (2025-037)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking

Finding Number: 2025-037 Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure Foster Care Maintenance payment rates were properly calculated. Program: 93.658 – Foster Care Title IV-E Compliance Requiremen...

Finding Number: 2025-037 Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure Foster Care Maintenance payment rates were properly calculated. Program: 93.658 – Foster Care Title IV-E Compliance Requirement: Special Tests and Provisions – Payment Rate Setting and Application Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department concurs that policies and procedures related to rate setting for Foster Care maintenance payments are not currently established and is committed to strengthening internal controls and complying with federal requirements. In February 2025, the Department met with the State Auditor’s Office to gather an understanding of concerns and discuss how reasonable and allowable rates could be documented to ensure federal compliance. In July 2025, the Department began drafting the written policies and procedures for setting payment rates to ensure maintenance payment rates only include allowable costs. The Department will continue to follow internal processes to complete the payment and rate setting policies and procedures. Prior Findings: The conditions noted in this finding were previously reported in finding 2024-071. Completion Date: Estimated July 2026 Agency Contact: Stefanie Niemela Audit Liaison (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 1191964 (2025-030)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Period of Performance

Finding Number: 2025-030 Finding: The Department of Commerce improperly charged $131,015 to the Low-Income Home Energy Assistance Program. Program: 93.568 – Low-Income Home Energy Assistance Program Compliance Requirement: Period of Performance Questioned Costs: $131,015 Status: Corrective action in...

Finding Number: 2025-030 Finding: The Department of Commerce improperly charged $131,015 to the Low-Income Home Energy Assistance Program. Program: 93.568 – Low-Income Home Energy Assistance Program Compliance Requirement: Period of Performance Questioned Costs: $131,015 Status: Corrective action in progress Corrective Action: The Department agrees that internal controls should be strengthened for the review and approval of administrative expenses. The Low-Income Home Energy Assistance Program (LIHEAP) management is working with accounting, budget, and the internal controls departments to create a process and workflow in which all LIHEAP administrative expenditures are reported, reviewed, and approved to ensure all expenditures are within the applicable period of performance and are adequately documented. However, the Department disagrees with the questioned costs identified in the finding and maintains that they were expended in compliance with the Code of Federal Regulations and the guidance provided by the U.S. Department of Health and Human Services (HHS). The Department will consult with HHS on the questioned costs identified in the finding. Prior Findings: The conditions noted in this finding were previously reported in finding 2024-050. Completion Date: Estimated September 2026 Agency Contact: Gena Allen, CFE Internal Control Officer (360) 480-5149 Gena.Allen@Commerce.wa.gov

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Finding 1191960 (2025-026)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Internal Control / Segregation of Duties Questioned Costs

Finding Number: 2025-026 Finding: The Department of Social and Health Services did not have adequate internal controls to ensure only eligible clients received cash benefits under the Refugee and Entrant Assistance program and improperly charged $4,440 to the program. Program: 93.566 – Refugee and E...

Finding Number: 2025-026 Finding: The Department of Social and Health Services did not have adequate internal controls to ensure only eligible clients received cash benefits under the Refugee and Entrant Assistance program and improperly charged $4,440 to the program. Program: 93.566 – Refugee and Entrant Assistance State/Replacement Designee Administered Programs Compliance Requirement: Eligibility Questioned Costs: $4,440 Status: Corrective action in progress Corrective Action: The Department concurs with the finding. As of October 2025, the Department requested the ESA Management Analytics and Performance Statistics (EMAPS) team to generate a report detailing all eligibility determinations made in the six weekly periods that were found to be lacking managerial review. As of November 2025, the Department submitted a formal EMAPS work request to develop a Refugee Cash Assistance (RCA) flagged eligibility caseload report. In addition to metrics already reviewed, this report includes a metric to flag cases where the “U.S. entry date” field has been modified. As of January 2026, the Department: • Developed, documented, and implemented a comprehensive process for managerial reviews of flagged eligibility caseload reports, including a backup process in the absence of the primary reviewer. • Developed and implemented a formal oversight process to monitor the completion and documentation of managerial reviews of all flagged eligibility caseload reports. This process will include a recurring check or log to ensure 100% compliance. • Revised the existing RCA desk aid to provide additional training and guidance to eligibility staff, clarifying the appropriate determination of the RCA eligibility period. The desk aid will specifically include instructions that staff are not to change the original date entered in the “U.S. entry date” field when a client leaves and reenters the country. As of March 2026, the Department reviewed the EMAPS reports to identify and correct any eligibility determination errors. By April 2026, the Department will develop and implement a tracking method to ensure all appropriate eligibility staff are trained on the revised RCA desk aid to ensure alignment with policy and procedures. If the grantor contacts the Department regarding the questioned costs identified in this finding, the Department will consult with the grantor to determine whether repayment is required. Prior Findings: None Completion Date: Estimated April 2026 Agency Contact: Richard Meyer External Audit Compliance Manager Richard.Meyer@dshs.wa.gov

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Finding 1191956 (2025-025)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Subrecipient Monitoring Questioned Costs

Finding Number: 2025-025 Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure payments to child care providers paid with Temporary Assistance for Needy Families funds were allowable and properly supported. Program: 93.558 – Temporary Assistance f...

Finding Number: 2025-025 Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure payments to child care providers paid with Temporary Assistance for Needy Families funds were allowable and properly supported. Program: 93.558 – Temporary Assistance for Needy Families Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $2,296 Status: Corrective action in progress Corrective Action: The Department agrees with the three audit exceptions identified by the State Auditor’s Office resulting from testing of attendance records and documentation from providers. In February 2026, the Department wrote overpayments for the exceptions identified and submitted them for recovery to the Department of Social and Health Services, Office of Financial Recovery. The Department will: • Develop a decision package to request funding for options to increase internal controls for provider payments. • Update the Child Care Subsidy Program Integrity Plan and quality assurance audit procedures to align with current practices When the Department of Health and Human Services (HHS) issues a management decision letter for the fiscal year 2025 finding, the Department will work with HHS and follow the audit resolution process. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-042, 2023-051, 2022-035, and 2021-028. Completion Date: Estimated October 2026 Agency Contact: Stefanie Niemela External Audit Liaison (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 1191954 (2025-023)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-023 Finding: The Department of Health did not have adequate internal controls over and did not comply with requirements to ensure subrecipients of the Epidemiology and Laboratory Capacity for Infectious Diseases program received required single audits, and that it appropriately ...

Finding Number: 2025-023 Finding: The Department of Health did not have adequate internal controls over and did not comply with requirements to ensure subrecipients of the Epidemiology and Laboratory Capacity for Infectious Diseases program received required single audits, and that it appropriately followed up on findings and issued management decisions. Program: 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department continues to work on strengthening the subrecipient single audit review process. Procedures will be formalized for tracking and reviewing subrecipients’ single audits, issuing management decisions timely, and following up on corrective actions. The Department will also ensure staff are accountable for implementing the identified procedures and will develop additional oversight to ensure compliance. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-041 and 2023-049. Completion Date: Estimated December 2026 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1191953 (2025-022)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Reporting Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-022 Finding: The Department of Health did not have adequate internal controls over and did not comply with reporting requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases and the Immunization Cooperative Agreements programs. Program: 93.268 – Immuniza...

Finding Number: 2025-022 Finding: The Department of Health did not have adequate internal controls over and did not comply with reporting requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases and the Immunization Cooperative Agreements programs. Program: 93.268 – Immunization Cooperative Agreements 93.268 – COVID-19 Immunization Cooperative Agreements 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department will strengthen internal controls over the preparation and review of the SF-425 Federal Financial Reports for the Epidemiology and Laboratory Capacity for Infectious Diseases and Immunization Cooperative Agreements programs. The Department will: • Implement additional validation procedures to confirm that financial data used to prepare the reports is accurate and consistent with the Department’s accounting records. • Review grant coding and related chart of account structures used for financial reporting to reduce the risk of reporting errors. • Enhance procedures for preparing SF-425 reports to ensure that obligations, expenditures, and unobligated balances are reported in accordance with federal guidance. • Document management review performed to verify completeness and accuracy of information prior to report submission. Prior Findings: The conditions noted in this finding were previously reported in finding 2024-033. Completion Date: Estimated June 2027 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1191952 (2025-021)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-021 Finding: The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable and met cost principles for the Epidemiology and Laboratory Capacity for Infectious Diseases and the Immunization Cooperative Agreements programs. Pro...

Finding Number: 2025-021 Finding: The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable and met cost principles for the Epidemiology and Laboratory Capacity for Infectious Diseases and the Immunization Cooperative Agreements programs. Program: 93.268 – Immunization Cooperative Agreements 93.268 – COVID-19 Immunization Cooperative Agreements 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department will strengthen internal controls over subrecipient payments by formalizing the approval and communication process between program and accounting staff. Specifically, the Department will: • Provide additional staff training on the requirement of documenting program review and approval of subrecipient payment requests in program files. • Standardize procedures for programs to communicate payment approval to the accounting unit before issuing payments. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-037, 2024-032, 2023-046, 2023-044, 2022-033, and 2022-031. Completion Date: Estimated May 2026 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1191951 (2025-006)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Cash Management Questioned Costs

Finding Number: 2025-006 Finding: The Department of Health did not have adequate internal controls over cash management for the Epidemiology and Laboratory Capacity for Infectious Diseases, the Immunization Cooperative Agreements and the WIC Special Supplemental Nutrition Program for Women, Infants,...

Finding Number: 2025-006 Finding: The Department of Health did not have adequate internal controls over cash management for the Epidemiology and Laboratory Capacity for Infectious Diseases, the Immunization Cooperative Agreements and the WIC Special Supplemental Nutrition Program for Women, Infants, and Children programs. Program: 10.557 – WIC Special Supplemental Nutrition Program for Women, Infants, and Children 93.268 – Immunization Cooperative Agreements 93.268 – COVID-19 Immunization Cooperative Agreements 93.323 – Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) 93.323 – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Compliance Requirement: Cash Management Questioned Costs: $160,206 Status: Corrective action in progress Corrective Action: The Department is taking steps to strengthen internal controls over cash management and related system processes. During the audit period, the Department identified issues within the Grants Management System but were unable to implement system enhancements prior to the end of the audit period. The Department will continue to address these system issues to ensure compliance with federal requirements. Additionally, the Department will: • Review and strengthen controls over the accuracy and maintenance of accounting data used in cash draw calculations. • Improve review and monitoring procedures to ensure amounts used to support federal cash draws are accurate, complete, and supported by appropriate documentation. • Evaluate existing roles and responsibilities to ensure appropriate oversight, review, and segregation of duties related to cash management activities. The Department is reviewing the questioned costs identified by the auditors and will take appropriate action in accordance with federal requirements, which may include adjustments or repayment, as necessary. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-036 and 2024-033. Completion Date: Estimated December 2026 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1191934 (2025-017)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

Finding Number: 2025-017 Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Coronavirus State and Local Fiscal Recovery Funds received required single audits, and that it appropriately followed ...

Finding Number: 2025-017 Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Coronavirus State and Local Fiscal Recovery Funds received required single audits, and that it appropriately followed up on findings and issued management decisions. Program: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Department partially agrees with the finding. The Department acknowledges that there were subrecipients who should have received management decision letters but were not identified during monitoring. Additional monitoring steps have been added to identify these entities. The Department concludes that the other deficiencies reported were not supported by requirements included in the Code of Federal Regulations (CFR) but were based on the State Auditor’s Office’s preferences. In October 2024, the Internal Controls Office (ICO) added a Management Analyst 5 dedicated to ensuring the requirements in 2 CFR 200.501 Audit Requirements are followed. The ICO also updated processes to ensure compliance with subrecipient monitoring requirements. The ICO maintains that key controls are in place and the Department materially complied with all compliance requirements regarding monitoring subrecipients’ single audit submissions. The ICO will continue to issue management decision letters as required and communicate subrecipients’ non-compliance issues to program management. Prior Findings: The conditions noted in this finding were previously reported in finding 2024-023. Completion Date: July 2025 Agency Contact: Gena Allen, CFE Internal Control Officer (360) 480-5149 Gena.Allen@Commerce.wa.gov

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Finding 1191933 (2025-016)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring

Finding Number: 2025-016 Finding: The Department of Corrections improperly charged $222 to the Coronavirus State and Local Fiscal Recovery Funds program. Program: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Activities Allowed or Unallowed and Allowable...

Finding Number: 2025-016 Finding: The Department of Corrections improperly charged $222 to the Coronavirus State and Local Fiscal Recovery Funds program. Program: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $222 Status: Corrective action complete Corrective Action: The Department concurs that the questioned costs identified by the auditors were charged to the grant due to an employee’s overpayment. The Department is committed to ensuring compliance with federal grant requirements. In response to this audit finding, the Department: • Provided education to local payroll liaisons to ensure the Automated Time & Labor Advanced Scheduling (ATLAS) system checklist and standard processes are followed. • Reviewed the logic around shift differential in ATLAS and determined that the cause of the shift differential errors identified in the audit was the result of shifts not assigned to employees’ schedules. • Worked with the vendor to provide a report identifying employees whose shifts in ATLAS show a discrepancy that may affect shift differential overtime logic. The Department will discuss any repayment of questioned costs through the normal audit resolution process with the U.S. Department of the Treasury. Prior Findings: None Completion Date: November 2025 Agency Contact: Sandra Morrison Comptroller (360) 480-4596 svmorrison@doc1.wa.gov

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Finding 1191856 (2025-015)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Finding Number: 2025-015 Finding: The Housing Finance Commission did not have adequate internal controls over and did not comply with reporting requirements for the Homeowner Assistance Fund program. Program: 21.026 – COVID-19 Homeowner Assistance Fund Compliance Requirement: Reporting Questioned Co...

Finding Number: 2025-015 Finding: The Housing Finance Commission did not have adequate internal controls over and did not comply with reporting requirements for the Homeowner Assistance Fund program. Program: 21.026 – COVID-19 Homeowner Assistance Fund Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action complete Corrective Action: To address the deficiencies identified by the auditors in prior years’ findings, the Commission has strengthened internal controls in completing annual performance reports for the Homeowner Assistance Fund program. The Commission has refined its management review process and updated procedures to require additional review and approval by Finance Division management prior to submitting the annual report. This will be evidenced with submission of the federal fiscal year 2026 report. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-017 and 2023-025. Completion Date: November 2025 Agency Contact: Lucas Loranger Senior Finance Director (206) 464-7139 Lucas.Loranger@wshfc.org

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Finding 1191853 (2025-012)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Eligibility Special Tests & Provisions

Finding Number: 2025-012 Finding: The Employment Security Department did not have adequate internal controls over and did not comply with requirements to ensure it profiled all claimants under the Unemployment Insurance program to identify people likely to need reemployment services and ensure repor...

Finding Number: 2025-012 Finding: The Employment Security Department did not have adequate internal controls over and did not comply with requirements to ensure it profiled all claimants under the Unemployment Insurance program to identify people likely to need reemployment services and ensure reports are reviewed before submission to the federal government. Program: 17.225 – Unemployment Insurance Compliance Requirement: Special Tests and Provisions – UI Reemployment Programs: Worker Profiling and Reemployment Services (WPRS) and Reemployment Services and Eligibility Assessments Questioned Costs: $0 Status: Corrective action in progress Corrective Action: In response to the finding and recommendations, the Department has taken the following actions: • In December 2025, reviewed the design of the Unemployment Tax and Benefits (UTAB) calculation and risk profile score and performed testing on its accuracy. • In January 2026: o Implemented additional internal controls to ensure claimants are profiled and prioritized for reemployment services based on their risk of exhausting unemployment benefits, in accordance with federal requirements. o Provided additional guidance to staff to ensure quarterly Employment and Training Administration (ETA) reports are completed accurately and submitted timely in accordance with ETA procedures. o Implemented a process to improve oversight in the reporting procedures to include adequate review and approval before submission to the grantor, and the proper retention of filed reports. The Department continues work to fully staff the unit and is working with the federal grantor and state partners regarding training and guidance on new accounting and reporting system changes. The Department partially concurs with the recommendation to reconcile the UTAB and Reemployment Appointment Scheduler (RAS) interface. There is currently a process in place to notify the RAS team if a record fails at the time of data transmission between UTAB and RAS. The Department is working on prioritizing resources to review the processes to verify that the complete UTAB exit file was successfully received by RAS. This work is anticipated to be completed in June 2026. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-009 and 2023-010. Completion Date: Estimated June 2026 Agency Contact: Joshua Summers External Audit Manager (360) 529-6718 Joshua.Summers@esd.wa.gov

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Finding 1191852 (2025-011)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Questioned Costs Allowable Costs / Cost Principles

Finding Number: 2025-011 Finding: The Employment Security Department did not have adequate internal controls over the 2208A reporting requirements for the Unemployment Insurance program. Program: 17.225 – Unemployment Insurance Compliance Requirement: Reporting Questioned Costs: $0 Status: Correctiv...

Finding Number: 2025-011 Finding: The Employment Security Department did not have adequate internal controls over the 2208A reporting requirements for the Unemployment Insurance program. Program: 17.225 – Unemployment Insurance Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Department notified our federal grantor when we became aware of the issue and submitted corrected reports for the periods in question. To improve internal controls, the Department: • Updated internal processes for reviewing reports and retaining all supporting documentation. • Implemented a new process to run a cumulative report to provide additional backup and to detect variances throughout the fiscal year. Prior Findings: None Completion Date: December 2025 Agency Contact: Joshua Summers External Audit Manager (360) 529-6718 Joshua.Summers@esd.wa.gov

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Finding 1191848 (2025-008)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles School Nutrition Programs Questioned Costs

Finding Number: 2025-008 Finding: The Department of Social and Health Services did not have adequate internal controls to ensure payments were allowable and made only to eligible beneficiaries for the Summer Electronic Benefits Transfer Program for Children. Program: 10.646 – Summer Electronic Benef...

Finding Number: 2025-008 Finding: The Department of Social and Health Services did not have adequate internal controls to ensure payments were allowable and made only to eligible beneficiaries for the Summer Electronic Benefits Transfer Program for Children. Program: 10.646 – Summer Electronic Benefits Transfer Program for Children Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Eligibility Questioned Costs: $55,454 Status: Corrective action in progress Corrective Action: The Department concurs with the finding. The improper payments identified by the auditors resulted from the challenges of a new program in its first year of implementation. Errors occurred when users from the Department and the Office of Superintendent of Public Instruction migrated data onto new templates and inadvertently included ineligible students and inaccurate dates of birth. The Department agrees that thorough data validation prior to issuance of benefits would have better identified systemic issues related to age and enrollment. Upon discovery, the Department promptly removed ineligible issuances to limit the state’s liability. The Department does not process overpayments on spent benefits based on 7 CFR 292.27(c)(2): “To the maximum extent practicable, Summer EBT agencies should limit claims against households to situations where there is evidence that the household knowingly obtained benefits through fraudulent activities.” In addition, the approved state plan with the federal grantor included a provision that the Department will not process overpayments for improper benefits unless there is evidence of fraud. By April 2026, the Department’s Community Services Division (CSD) will: • Implement a review process to verify age of applicants and address questionable data before submission to the contractor. • Amend the contract with the contractor to include specific reporting requirements for duplicate issuances and identification of ineligible participants. By July 2026, the Department’s CSD will: • Implement a mandatory data reconciliation process in which the contractor must provide full participant datasets, including dates of birth and eligibility status, to the CSD for review and approval prior to benefit issuance. • Request the contractor to complete an enhancement to its eligibility determination system to automatically flag participants under age one or over age 22 for further review. • Request the Electronic Benefits Transfer vendor to create a standard monthly report to show expenditures and expired benefits by client. If the grantor contacts the Department regarding the questioned costs identified in this finding, the Department will consult with the grantor to determine whether repayment is required. Prior Findings: None Completion Date: Estimated July 2026 Agency Contact: Richard Meyer External Audit Compliance Manager Richard.Meyer@dshs.wa.gov

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Finding 1191842 (2025-001)

Material Weakness 2025

Youth Network Council

IL

Questioned Costs Allowable Costs / Cost Principles Internal Control / Segregation of Duties

During the year a new timesheet template was created. There were a couple of instances during the initial implementation of this new spreadsheet where timesheets did not agree to the template. We believe that this inconsistency has since been addressed.

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Finding 1191811 (2025-001)

Material Weakness 2025

St Luke's Health Corporation

MO

Internal Control / Segregation of Duties Questioned Costs Allowable Costs / Cost Principles

Management response Finding 2025-001 – Allowability and Period of Performance (Material Weakness) View of Responsible Official: Management concurs with the finding. During the audit period, controls over payroll documentation for FEMA-related labor costs were not sufficiently designed and documented...

Management response Finding 2025-001 – Allowability and Period of Performance (Material Weakness) View of Responsible Official: Management concurs with the finding. During the audit period, controls over payroll documentation for FEMA-related labor costs were not sufficiently designed and documented to demonstrate independent supervisory review and approval of timecards, nor were controls in place to evidence review of wage rates for reasonableness prior to charging labor costs to the award. Management has strengthened its control procedures. Supervisors are required to review and approve employee timecards each pay period in UKG, and compliance with timecard approval is monitored through exception reporting provided to management. In addition, management has implemented a review control over wage rates charged to FEMA claims to verify that rates used are supported and reasonable in accordance with applicable Uniform Guidance requirements and internal policy. These controls will be documented and retained as part of the support for future federal award reporting. Responsible Parties: Payroll Manager, Director of Finance, Vice President of Finance Anticipated Completion Date: Complete

View Audit 395627

Corrective Action Plans

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