Corrective Action Plans

Finding 558719 (2024-024)

None 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Allowable Costs / Cost Principles § 200.1 § 200.410

Finding: The Office of Superintendent of Public Instruction improperly charged $5,139 to the Special Education program. Questioned Costs: Assistance Listing # 84.027 84.027 COVID-19 84.173 84.173 COVID-19 Amount $5,139 Status: Corrective action complete Corrective Action: The Office o...

Finding: The Office of Superintendent of Public Instruction improperly charged $5,139 to the Special Education program. Questioned Costs: Assistance Listing # 84.027 84.027 COVID-19 84.173 84.173 COVID-19 Amount $5,139 Status: Corrective action complete Corrective Action: The Office of Superintendent of Public Instruction concurs with this finding. The Office has strengthened internal controls to address accounting adjustments made during liquidation periods to ensure that expenditures occurring outside of a grant’s period of performance are not shifted to the grant. Procedures are updated to: • Monitor expenditures through reconciliation of monthly reports to ensure the spending level stays within the allowable threshold and grant maximum. • Require all journal vouchers correcting expenditures during the grant liquidation period be verified by budget staff to ensure they are charged to the appropriate grant period of performance. • Complete expenditure corrections within the grant liquidation period. • Liquidate obligations on the last business day of January (or 120 days after the budget period ends). The Office will communicate the corrective action plan with internal stakeholders to ensure compliance with updated procedures. The Office will consult with the federal grantor to discuss whether the questioned costs identified in the audit should be repaid. Completion Date: November 2024 Agency Contact: Tania May Assistant Superintendent, Special Education PO Box 47200 Olympia, WA 98504-7200 (360) 725-6075 Tania.may@k12.wa.us

View Audit 355165 Questioned Costs: $1

Finding 558698 (2024-084)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

Finding: The Health Care Authority did not have adequate internal controls to ensure subrecipients of the Block Grants for Substance Use, Prevention, Treatment and Recovery Services program received required single audits, and that it appropriately followed up on findings and issued management deci...

Finding: The Health Care Authority did not have adequate internal controls to ensure subrecipients of the Block Grants for Substance Use, Prevention, Treatment and Recovery Services program received required single audits, and that it appropriately followed up on findings and issued management decisions. Questioned Costs: Assistance Listing # 93.959 93.959 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: In January 2024, the Authority implemented adequate internal controls, policies, and procedures over its process for tracking subrecipients’ single audits. In accordance with the audit recommendation, the Authority will continue to follow the new policies and procedures. No further corrective action is necessary. The conditions noted in this finding were previously reported in findings 2023-087 and 2022-066. Completion Date: January 2024 Agency Contact: William Sogge, CPA, CIA External Audit Compliance Specialist PO Box 42724 Olympia, WA 98504-2691 (360) 725-5110 william.sogge@hca.wa.gov

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Finding 558696 (2024-082)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Reporting Subrecipient Monitoring

Finding: The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the Block Grants for Substance Use Prevention, Treatment, and Recovery Services program were allowable and met period of performance requirements....

Finding: The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure payments to providers for the Block Grants for Substance Use Prevention, Treatment, and Recovery Services program were allowable and met period of performance requirements. Questioned Costs: Assistance Listing # 93.959 93.959 COVID-19 Amount $10,467,736 Status: Corrective action not taken Corrective Action: The Authority does not concur with the finding. The Authority maintains that its internal controls are effective, and procedures are compliant with grant requirements. No corrective action will be implemented. The costs questioned by the auditor do not reflect funds that have been paid or drawn from the grantor. As a result, there are no funds to return to the grantor. The conditions noted in this finding were previously reported in findings 2023-084 and 2022-067. Completion Date: Not applicable Agency Contact: William Sogge, CPA, CIA External Audit Compliance Specialist PO Box 42724 Olympia, WA 98504-5502 (360) 725-5110 william.sogge@hca.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558689 (2024-075)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Procurement, Suspension & Debarment Subrecipient Monitoring

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. Questioned Costs: Assistance Listing # 93.767 93.767 COVID-19 93.775 93.777 93.777 COVID...

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. Questioned Costs: Assistance Listing # 93.767 93.767 COVID-19 93.775 93.777 93.777 COVID-19 93.778 93.778 COVID-19 Amount $3,844,961 Status: Corrective action in progress Corrective Action: The Authority partially concurs with the finding. The Authority does not concur with the auditor’s assertion that two providers did not have a valid Core Provider Agreement on file. The Authority also does not concur that two new providers were enrolled without completion of a full enrollment screening. Corrective action has been in process to address revalidation issues from prior audits. As of January 1, 2024, the Authority implemented a system change moving the revalidation date to 90 days before the end of the five-year period. The Authority is revising existing procedures to strengthen internal controls over provider enrollment. Additional procedure implementation is also in progress to ensure high risk providers receive fingerprint-based background checks. Regarding the nursing facility revalidations, the Authority operates cooperatively under a written agreement with the Department of Social and Health Services (Department) who carry out the nursing facility licensing and revalidations. The Department stated: Effective May 2024, the Department updated the nursing facility revalidation process to require the Facilities Contract Specialist review the nursing facility revalidation monitoring spreadsheet monthly and that revalidation paperwork will be sent one year before the due date to ensure revalidation is done ahead of the 5-year period. In addition, the Department will consult with the Authority to determine if it is feasible to automate the revalidation notices. By December 31, 2025, Department contracts staff will verify that the Medicaid Provider Disclosure Statement forms are in the Management Operation Document Imaging System for all nursing facilities and that each form has been completed within the 5-year period. The conditions noted in this finding were previously reported in findings 2023-074, 2022-055, 2021-047, 2020-046, 2019-048, 2018-042, 2017-033, and 2016-035. Completion Date: Estimated December 2025 Agency Contact: William Sogge External Audit Compliance Specialist PO Box 45502 Olympia, WA 98504-5502 (360) 725-5110 william.sogge@hca.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558688 (2024-074)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Special Tests & Provisions Internal Control / Segregation of Duties

Finding: The Health Care Authority did not have adequate internal controls over and did not comply with managed care financial audit requirements. Questioned Costs: Assistance Listing # 93.767 93.767 COVID-19 93.775 93.777 93.777 COVID-19 93.778 93.778 COVID-19 Status: Corrective action com...

Finding: The Health Care Authority did not have adequate internal controls over and did not comply with managed care financial audit requirements. Questioned Costs: Assistance Listing # 93.767 93.767 COVID-19 93.775 93.777 93.777 COVID-19 93.778 93.778 COVID-19 Status: Corrective action complete Corrective Action: Audited financial reports: The Authority amended the managed care contract to require Managed Care Organizations to submit financial statements prepared in accordance with Generally Accepted Accounting Principles and Generally Accepted Auditing Standards. The amended contract requirement went into effect January 1, 2025. Periodic audits: The Authority implemented internal controls during state fiscal year 2024 to ensure periodic audits are completed within the required timeline. The conditions noted in this finding were previously reported in findings 2023-073, 2022-054, and 2021-048. Completion Date: June 2024 Agency Contact: Kari Summerour, CPA External Audit Compliance Manager PO Box 42724 Olympia, WA 98504-2691 (360) 725-9586 Kari.Summerour@hca.wa.gov

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Finding 558684 (2024-072)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Period of Performance Subrecipient Monitoring

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 providers were allowable and properly supported for the Social Services Block Grant. Questioned Costs: Assistance Listing # 93.667 ...

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 providers were allowable and properly supported for the Social Services Block Grant. Questioned Costs: Assistance Listing # 93.667 Amount $9,098,747 Status: Corrective action in progress Corrective Action: The Department maintains that funds were not improperly charged or reported for the Social Services Block Grant (SSBG) program. The Department implemented grant-level management of all federal funds, including the SSBG program. This process consists of making grant-level adjustments between allowable grant sources to properly spend grant funds within the allowable period of performance and ensure level of effort and matching requirements are met. The Department allocated the SSBG funds to eligible clients and allowable activities in compliance with 45 CFR 98.67 but did not include the level of data recommended by the State Auditor’s Office (SAO) for some transfers. In response to the auditor’s recommendations, the Department submitted a budget request for the 2024 supplemental budget. The enacted budget included funding to implement the Department’s budget request beginning July 1, 2024. The Department is working with a developer to assist with building out the required databases between the Social Service Payment System and the Agency Financial Reporting System to allow transfers between funding sources to include transaction level data related to the expenditures. The Department is committed to collaborating with SAO to determine an appropriate methodology which identifies a sampling unit that can be used to accurately test compliance. The Department looks forward to working with SAO to resolve the data concerns in the audit of the SSBG program. The conditions noted in this finding were previously reported in finding 2023-070. Completion Date: Estimated December 2025 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558665 (2024-071)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

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

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. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Status: Corrective ...

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. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 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. The Department will prioritize establishing written policies and procedures for setting payment rates to ensure maintenance payment rates only include allowable costs. Completion Date: Estimated July 2026 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 558662 (2024-068)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

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

Finding: The Department of Children, Youth, and Families did not have adequate controls over and did not comply with certain requirements of its Public Assistance Cost Allocation Plan. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action complet...

Finding: The Department of Children, Youth, and Families did not have adequate controls over and did not comply with certain requirements of its Public Assistance Cost Allocation Plan. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department concurs with the finding and is committed to improving internal controls. The Department did not have adequate staffing levels to maintain the business processes for one monthly workbook for the Public Assistance Cost Allocation Plan. The Department was not able to complete the August 2023 workbook for cost base 100 (administrative charges) due to competing state and federal fiscal year close deadlines. Available staff were focused on grant reconciliations and closing out the prior fiscal year financial transactions. The Department has reviewed the base edit form written procedures with staff and added monthly reminders for the Cost Allocation and Grants Management Unit. In addition, the Department has confirmed that to date all cost base 100 workbooks have been properly completed for the state fiscal year 2025. The conditions noted in this finding were previously reported in findings 2023-065 and 2022-047. Completion Date: March 2025 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 558661 (2024-067)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

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

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure monthly foster care maintenance payments to children’s caregivers were adequate and accurate for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Sta...

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure monthly foster care maintenance payments to children’s caregivers were adequate and accurate for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Status: Corrective action complete Corrective Action: The Department is committed to strengthening internal controls and complying with grant requirements. As stated in the finding’s Cause of Condition, the Department did not fully implement the prior year’s corrective action plan during the audit period and did not have the reporting capabilities to track rate setting reviews for the entire audit period. To strengthen internal controls and documentation, and as part of the implementation of the new rate assessment process, the Department took the following corrective actions: • Published a new report in FamLink to assist rate assessors in identifying: o Six-month reviews that have not been performed timely. o Cases with upcoming rate assessments and due dates for reviews. • Implemented monthly tracking by supervisors to assist with internal controls and compliance. The Department continues to use the Plan, Do, Check, Act (continuous quality improvement process) to improve the accuracy of the new reports and provide additional training to staff as needed to ensure compliance with the requirement of performing six-month reviews of the reimbursement rates. The conditions noted in this finding were previously reported in finding 2023-067. Completion Date: June 2024 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 558660 (2024-066)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure payments to providers for travel and family visits were allowable and adequately supported for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Statu...

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure payments to providers for travel and family visits were allowable and adequately supported for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Status: Corrective action in progress Corrective Action: The Department is committed to strengthening internal controls and complying with grant requirements. In response to the prior year audit finding, the Department has taken the following actions: • Between April and December 2023: o Filled two vacant contract staff positions dedicated to reviewing child welfare contracts to include family time visit payments. o Developed compliance audit plans for child welfare contracts and began fiscal monitoring of family time visit payments. o Implemented a new process for creating Sprout invoices from family time activity data to include the following:  Utilizing algorithms to identify reimbursements outside of reasonable amounts.  Requiring providers to submit additional documentation or explanation for flagged invoices.  Identifying duplicate billings using a re-run process.  Performing additional review and approval of invoices of the Network Administrator in Eastern Washington prior to release of payment. • Between January and March 2024: o Identified and implemented regional program approvals for Western Washington providers. o Implemented fiscal monitoring controls to ensure payments to providers for travel and family visits are allowable and adequately supported. o Utilized the Plan, Do, Check, Act (continuous quality improvement process) to add additional steps to the process to ensure payments were accurate. In response to the State Auditor’s Office (SAO) recommendations, the Department will: • Reconcile the identified payment exceptions and take appropriate action. • Review the implemented invoice and payment process and update training resources as needed. • Refine the compliance audit plans and update documentation for the contract monitoring process to ensure that SAO can review documentation for monitoring tasks completed. The conditions noted in this finding were previously reported in findings 2023-066, 2022-048, and 2021-040. Completion Date: Estimated July 2025 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558652 (2024-055)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Low Income Home Energy Assistance program received required single audits, and that it appropriately followed up on findings and issued manage...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Low Income Home Energy Assistance program received required single audits, and that it appropriately followed up on findings and issued management decisions. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Status: Corrective action in progress Corrective Action: In October 2024, the Department’s Internal Control Office hired two additional staff with one dedicated to ensuring the requirements in 2 CFR 200.501 are followed. The Internal Control Office will complete the following processes to ensure compliance with subrecipient monitoring requirements of all Low-Income Home Energy Assistance Program (LIHEAP) awards: • Obtain the subaward population from program management. • Issue management decision letters to all program subrecipients who receive LIHEAP findings. • Work with program management to conduct outreach for subrecipients who have not met the audit reporting deadline. • Document non-responsive subrecipients not in compliance with the reporting requirement and notify program management. Completion Date: Estimated September 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

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Finding 558647 (2024-050)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles § 200.1 § 200.410

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with period of performance requirements for the Low-Income Home Energy Assistance program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $4,409,760 Status: Corrective ...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with period of performance requirements for the Low-Income Home Energy Assistance program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $4,409,760 Status: Corrective action in progress Corrective Action: The Department will review and strengthen its policies and internal controls to ensure compliance with the Low-Income Home Energy Assistance Program (LIHEAP) period of performance requirements. This includes: • Implementing additional checks to verify that all expenditures are incurred within the award’s period of performance. • Providing additional training to staff on the period of performance requirements to prevent future misinterpretations. As part of the corrective action, the program has implemented the following changes: • For the 2024 and 2025 program years for LIHEAP awards, all subrecipient contracts were issued with a two-year period of performance to avoid new expenses being added to the closeout year. • Ensured that all new subrecipient contracts align with the Department’s updated internal approach. Based on the recommendation in the audit finding, the Department will consult with the grantor regarding the questioned costs identified in the audit. Completion Date: Estimated October 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558646 (2024-049)

None 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles

Finding: The Department of Commerce improperly charged $492,317 to earmarking requirements for the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $492,317 Status: Corrective action in progress Corrective Action: The Depart...

Finding: The Department of Commerce improperly charged $492,317 to earmarking requirements for the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $492,317 Status: Corrective action in progress Corrective Action: The Department is committed to maintaining compliance with federal guidelines and demonstrating our accountability in managing public funds. In response to the audit finding, the Low-Income Home Energy Assistance Program staff have completed the following: • Coordinated efforts with budget staff to verify the amounts expended and the deficiency reported. • Reviewed budget formulas used to calculate the required earmark as it relates to total funds expended. The Program will continue to: • Perform a thorough review of financial records, reconciliations, and adjustments to budgeting procedures to prevent future occurrences. • Implement enhanced internal controls and monitoring processes to ensure accurate budgeting and reporting of earmarked funds. The program will consult with the United States Department of Health and Human Services to seek guidance on the questioned costs. Completion Date: Estimated July 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558642 (2024-048)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Reporting

Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Refugee and Entrant Assistance programs received required single audits, and that it followed up on findings and issued mana...

Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Refugee and Entrant Assistance programs received required single audits, and that it followed up on findings and issued management decisions. Questioned Costs: Assistance Listing # 93.566 Amount $0 Status: Corrective action in progress Corrective Action: The Department partially concurs with the auditor’s findings. The Department’s Office of Refugee and Immigrant Assistance (ORIA) has taken corrective actions to strengthen controls over subrecipient monitoring. During the fiscal year, the program verified each subrecipient’s total federal financial assistance through online tax forms and determined if a single audit report is required. For subrecipients that met the single audit threshold, ORIA either received the single audit report from the subrecipient or accessed the Federal Audit Clearinghouse database to obtain a copy. However, the Department did not issue management decisions when applicable. By May 2025, the Department will work with the Division of Finance and Financial Resources (DFFR) to review all subrecipients’ single audit reports for state fiscal year 2024. Any audit findings related to activities funded by ORIA awards will be identified for necessary actions. By June 2025, as applicable, the Department will issue management decision letters for the findings outlining the determination of the effectiveness of the subrecipient’s proposed corrective action to address findings. By July 2025, the Department will: • Work with DFFR to implement effective internal controls and develop written procedures to ensure subrecipients receive required single audits; and to issue written management decisions as needed. • Monitor subrecipients’ corrective actions for findings received to ensure they are completed. The conditions noted in this finding were previously reported in finding 2023-053. Completion Date: Estimated July 2025 Agency Contact: Richard Meyer External Audit Compliance Manager PO Box 45804 Olympia, WA 98504-5804 (360) 664-6027 Richard.Meyer@dshs.wa.gov

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Finding 558637 (2024-043)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Eligibility Matching / Level of Effort / Earmarking

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over eligibility requirements for child care services paid with the Child Care and Development Fund and Temporary Assistance for Needy Families funds. Questioned Costs: Assistance Listing # 93.55...

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over eligibility requirements for child care services paid with the Child Care and Development Fund and Temporary Assistance for Needy Families funds. Questioned Costs: Assistance Listing # 93.558 93.575 93.575 COVID-19 93.596 Amount $0 Status: Corrective action complete Corrective Action: In response to prior audit findings, the Department developed a corrective action plan to address the internal control deficiencies. This finding was issued due to the corrective action plan not being fully implemented during the audit period. To address the prior years’ eligibility audit findings, the Department has taken the following actions: • As of April 2024, conducted a root cause analysis of internal audit findings, particularly for cases with errors due to household composition and approved activities, and updated the desk aid with corrective actions identified. • As of May 2024: o Improved and published the desk aid outlining simplified eligibility determination process that includes procedures for those families who do not have an approved activity. o Developed updated household composition training for all staff as part of core childcare training. The Department will continue to partner with the Administration for Children and Families and follow our program integrity plan. The conditions noted in this finding were previously reported in findings 2023-059, 2022-036, 2021-035, 2020-039, 2019-032, 2018-030, 2017-026, 2016-023, 2015-026, 2014-026, 2013-017, and 12-30. Completion Date: May 2024 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 355165

Finding 558636 (2024-042)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking

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 paid with Temporary Assistance for Needy Families funds were allowable and property supported. Questioned Costs: A...

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 paid with Temporary Assistance for Needy Families funds were allowable and property supported. Questioned Costs: Assistance Listing # 93.558 Amount $67,698,747 Status: Corrective action in progress Corrective Action: The Working Connections Child Care (WCCC) program was previously managed by the Department of Social and Health Services (DSHS) and the Department of Early Learning. Since the program transitioned in 2019, the Department has been making efforts to strengthen internal controls over payments to child care providers and other grant requirements. The Department implemented grant-level management of all federal funds, including the Temporary Assistance for Needy Families grant. This consisted of making significant grant level adjustments between allowable grant sources to properly spend grant dollars within the allowable period of performance and ensure level of effort and matching requirements were met. The Department’s grant adjustments were processed based on eligible clients and allowable activities. The State Auditor’s Office (SAO) has taken issue in the past several audits and maintained that the program is not auditable without child-level data. The Department is committed to collaborating with SAO to determine an appropriate methodology that identifies a sampling unit for accurately testing compliance. During the audit period, the Department did not have the staff and resources to develop and maintain the business process redesign, as well as the information technology initiatives necessary to meet the level of assurance recommended by the SAO. In response to the auditor’s recommendations, the Department submitted a budget request for the 2024 supplemental budget. The enacted budget included funding to implement the Department’s budget request beginning in state fiscal year 2025, specifically: “Funding in this subsection must be expended with internal controls that provide child-level detail for all transactions, beginning July 1, 2024.” The Department is working with a developer to assist with building out the required databases between the Social Service Payment System and the Agency Financial Reporting System to allow transfers between funding sources to include child-level data related to the expenditures. The Department looks forward to working with SAO to resolve the child-level data concerns in the audit of the child care grant programs. The conditions noted in this finding were previously reported in findings 2023-051, 2022-035, and 2021-028. Completion Date: Estimated December 2025 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558629 (2024-041)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

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

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 ...

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. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Department was not able to complete corrective action for the prior year’s finding due to staff shortages. The Department will continue to work on providing proper training and written processes to staff on the subrecipient single audit review process to ensure: • Timely review of federal subrecipient single audits. • Management decision letters are issued to subrecipients. • Subrecipients submit corrective action plans addressing deficiencies pertaining to the federal award, when applicable. Management will monitor the control activities to ensure future compliance with the requirements. The conditions noted in this finding were previously reported in finding 2023-049. Completion Date: Estimated December 2025 Agency Contact: Jeff Arbuckle External Audit Manager PO Box 47890 Olympia, WA 98504-7890 (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 558625 (2024-037)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Procurement, Suspension & Debarment

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 program. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Amo...

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 program. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Amount $2,037 Status: Corrective action not taken Corrective Action: The Department continues to disagree with the State Auditor’s Office (SAO) assessment of a material weakness in internal controls over the consolidated contract provider payment process. The Department partially agrees with the exceptions and questioned costs identified in the finding. The Department approved two payments that did not have the required supporting documentation for the subrecipients’ assigned risk level per agency policies, but maintains that these payments met federal cost principles for allowability as determined by staff review. Additionally, the program’s internal monitoring processes support the overall assurance of the allowability of payments. The program: • Maintains detailed budget information for each subrecipient by project area and, as A-19s are submitted, program and accounting staff update budget spreadsheets. When reviewing the support provided by the subrecipient, staff ensure amounts submitted by project are reasonable and align with expectations for the budget period. • Refers to the notice of funding opportunity, posted guidance, notice of award, as well as applicable federal regulations, to determine procedures related to allowable costs, purchases, and procurement. • Provides policy guidance, technical assistance, and training to subrecipients related to both allowability and compliance. • Continues to strengthen processes to ensure supporting documentation aligns with the Department’s documentation matrix for subrecipients in accordance with their assigned risk level. Additionally, the Department’s Fiscal Monitoring Unit provides technical assistance and training not only to program staff but also to the subrecipients while onsite and upon request as needed. The Department will consult with the grantor to determine whether the questioned costs identified in the finding should be repaid. The conditions noted in this finding were previously reported in findings 2023-046 and 2022-033. Completion Date: Not applicable Agency Contact: Jeff Arbuckle External Audit Manager PO Box 47890 Olympia, WA 98504-7890 (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558624 (2024-036)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Allowable Costs / Cost Principles Subrecipient Monitoring

Finding: The Department of Health did not have adequate internal controls over cash management and allowable cost requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases program. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Status: Corrective actio...

Finding: The Department of Health did not have adequate internal controls over cash management and allowable cost requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases program. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Status: Corrective action in progress Corrective Action: The Department partially agrees with the finding. The Department agrees with the auditors’ assessment of inadequate internal controls to ensure automated draw calculations in the Grant Management System are accurate. The Department is working diligently with the Information Technology (IT) division to identify and correct cash draw report calculation errors until they are resolved. The Department has taken steps to ensure adequate internal controls over cash management and allowable cost requirements for the program, but disagrees with the auditors’ assessment of internal control weaknesses in the following areas: • Daily manual reconciliation - During the audit period, the Department identified a concern with the AFRS Data Distribution Services database reporting criteria. With the IT division’s assistance, the Department was able to identify the cause of the report errors and made corrections within the audit period. • Chart of account updates - The Department initially set up the coding structure based on the Office of Financial Management’s 23-25 biennium Expenditure Authority (EA) schedule. In October 2023, an updated EA schedule was released to correct one EA code. The Department addressed the coding error timely and processed a journal voucher to move recorded expenditures to the correct coding. • Cash Management Improvement Act (CMIA) - The Department spends on a first in, first out method and uses the previous year’s coding for all expenditures that occurred in the allowable period. The Department has controls in place to ensure cash draws are performed in line with the CMIA funding techniques and the payroll cycle. The Department will consult with the grantor to determine whether the questioned costs identified in the finding should be repaid. Completion Date: Estimated July 2025 Agency Contact: Jeff Arbuckle External Audit Manager PO Box 47890 Olympia, WA 98504-7890 (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558612 (2024-032)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles

Finding: The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the Immunization Cooperative Agreements program. Questioned Costs: Assistance Listing # 93.268 93.2...

Finding: The Department of Health did not have adequate internal controls to ensure payments to subrecipients were allowable, met cost principles, and were within the period of performance for the Immunization Cooperative Agreements program. Questioned Costs: Assistance Listing # 93.268 93.268 COVID-19 Amount $464,473 Status: Corrective action complete Corrective Action: The Department partially agrees with the exceptions and questioned costs identified in the finding. The Department approved a payment with an incorrect indirect rate being applied which was subsequently identified by internal control processes and the overpayment was corrected during the audit period. The Department maintains that this should not be reported as an exception. Internal policies are held to a higher standard than federal requirements, and the level of documentation received from the subrecipients provided assurance that the payment in question met federal cost principles for allowability and period of performance at the time of review. Additionally, the program’s internal monitoring processes support the overall assurance of the allowability of payments. The program: • Maintains detailed budget information for each subrecipient by project area and, as A-19s are submitted, program and accounting staff update budget spreadsheets. When reviewing the support provided by the subrecipient, staff ensure amounts submitted by project are reasonable and align with expectations for the budget period. • Refers to the federal Immunization Program Operations Manual to determine procedures related to allowable costs, purchases, and procurement. • Provides policy guidance, technical assistance, and training to subrecipients related to both allowability and compliance. • Continues to strengthen processes to ensure supporting documentation aligns with the Department’s documentation matrix for subrecipients in accordance with their assigned risk level. Additionally, the Department’s Fiscal Monitoring Unit provides technical assistance and training, not only to program staff, but to the subrecipients while onsite and upon request as needed. The Department will consult with the grantor to determine whether the questioned costs identified in the finding should be repaid. The conditions noted in this finding were previously reported in findings 2023-044 and 2022-031. Completion Date: February 2025 Agency Contact: Jeff Arbuckle External Audit Manager PO Box 47890 Olympia, WA 98504-7890 (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

View Audit 355165 Questioned Costs: $1

Finding 558594 (2024-028)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles § 200.1 § 200.332 § 200.403 § 200.410

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Questioned Costs: Assistance Listing # 84.425R 84...

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal activities allowed and subrecipient monitoring requirements for the Education Stabilization Fund program. Questioned Costs: Assistance Listing # 84.425R 84.425V Amount $47,322,280 Status: Corrective action complete Corrective Action: The Office distributed the remaining unobligated funds from the program to Local Education Agencies (LEAs) through the apportionment process to meet the legislative intent. Due to the nature of how the payments were calculated, the Office’s grants system could not be used for the distribution. When a grant is awarded through our grants system, an email notification is sent to the organization that contains the federal elements required in 2 CFR 200.332. Although the Office concurs that we did not provide a formal subaward document that included all of the elements since the funds were not distributed through our grants system, the LEA’s received other formal communication through a Gov Delivery email and the School District Accounting Manual that included most of these federal elements. Going forward, if the Office uses the apportionment process to distribute funds to LEAs, all the required federal elements in 2 CFR 200.332 will be included in a separate subaward. The Office’s communication to LEAs also included the allowable use of these funds. Therefore, the Office does not concur that the funds should be questioned as not being allowable or properly supported. Completion Date: February 2025 Agency Contact: TJ Kelly Chief Financial Officer P.O. Box 47200 Olympia, WA 98504-7200 (360) 725-6301 Thomas.Kelly@k12.wa.us

View Audit 355165 Questioned Costs: $1

Finding 558482 (2024-023)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

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 or program-specific audits, and that it appropriately followed up o...

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 or program-specific audits, and that it appropriately followed up on findings and issued management decisions. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Department has strong internal controls over monitoring subrecipient audit report submission and verification processes. Since the Department does not have a centralized information system which identifies all subrecipients needing an audit submission verification, several methods were used to identify applicable subrecipients. In October 2024, the Department’s Internal Control Office hired two additional staff, one dedicated to ensuring the requirements in 2 CFR 200.501 are followed, including the review of subrecipients’ single audit report submissions and timely issuance of management decision letters. The Department will continue to strengthen internal controls to ensure compliance with all subrecipient monitoring requirements: • Work with leadership and the Central Contracts Office to determine options to identify all subrecipients who meet single audit reporting thresholds. • Work with program management to obtain full lists of federal subrecipients, conduct outreach for subrecipients who have not met the audit reporting deadline and document non-compliant and non-responsive subrecipients. • Establish a streamlined, documented process to ensure compliance with all monitoring and management decision requirements. Completion Date: Estimated October 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

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Finding 558480 (2024-021)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Procurement, Suspension & Debarment Allowable Costs / Cost Principles § 200.180

Finding: The Washington State Department of Transportation did not have adequate controls over and did not comply with procurement and suspension and debarment requirements for the Coronavirus State and Local Fiscal Recovery Funds. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amoun...

Finding: The Washington State Department of Transportation did not have adequate controls over and did not comply with procurement and suspension and debarment requirements for the Coronavirus State and Local Fiscal Recovery Funds. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Washington State Department of Transportation (WSDOT) is committed to ensuring our grant programs comply with federal regulations related to procurement, suspension, and debarment. WSDOT received the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) from the U.S. Department of the Treasury (Treasury) through the Office of Financial Management (OFM). At the time the funds were received, WSDOT was not able to obtain clear guidance or clarification from the Federal Highway Administration (FHWA) or Treasury on how these funds were to be administered. Nonetheless, WSDOT developed procedures for awarding contracts using the SLFRF funds, including contract provisions requiring adherence to the WSDOT Standard Specifications Manual for Road, Bridge, and Municipal Construction. WSDOT believed it was in compliance with all federal requirements, including procurement and suspension and debarment, and all applicable contract provisions. However, the auditors determined that these projects should be treated as other WSDOT projects and should follow FHWA contracting requirements. The SLFRF funds awarded were used for a limited program. If any future awards utilizing SLFRF funds are made, the Department will: • Utilize the internal controls currently in place for the FHWA contracting. • Continue to communicate with OFM to ensure that funds awarded are in compliance with federal regulations. • Communicate any required changes to the appropriate WSDOT staff, as needed. Completion Date: February 2025 Agency Contact: Jesse Daniels External Audit Liaison PO Box 47320 Olympia, WA 98504-7320 (360) 705-7035 danielje@wsdot.wa.gov

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Finding 558478 (2024-019)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Reporting § 200.303

Finding: The Department of Commerce did not have adequate internal controls to ensure payments to subrecipients were allowable, properly supported and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Funds. Questioned Costs: Assistance Listing # 21.0...

Finding: The Department of Commerce did not have adequate internal controls to ensure payments to subrecipients were allowable, properly supported and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Funds. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Department maintains that there are effective internal controls over programs that are funded by the Coronavirus State and Local Fiscal Recovery Funds. Due to delayed audit planning and scoping, the auditors were unable to perform procedures to ascertain whether the Department established and followed internal controls to ensure compliance with program requirements. The Department plans to ensure sufficient time and resources are available for all future audits by performing the following steps: • Performing outreach to all federal programs to document internal controls for all applicable compliance requirements before the start of the next single audit cycle. • Working with the State Auditor’s Office earlier in the audit cycle to identify the audit scope for selected programs. • Providing support and guidance to programs selected for audit to ensure compliance with all internal controls and compliance requirements. The conditions noted in this finding were previously reported in findings 2023-027, 2023-028, and 2022-019. Completion Date: Estimated August 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

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Finding 558477 (2024-018)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Reporting

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. Questioned Costs: Assistance Listing # 21.026 COVID-19 Amount $0 Status: Corrective action complete Corrective Ac...

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. Questioned Costs: Assistance Listing # 21.026 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: To address the deficiencies identified by the auditors in completing quarterly performance reports, the Commission has taken the following corrective actions to strengthen controls over reporting for the Homeowner Assistance Fund (HAF) program: • Updated procedures to require: o Homeownership Division and Finance Division staff to perform regular reconciliation of records to identify any discrepancies and to ensure all records are complete and accurate. o Supporting data obtained for reporting be vetted by the contractor and the Homeownership Division staff. o Leadership (division manager or above) to perform final review of data as well as the quarterly or annual report prior to submission to the grantor. • Designated the records maintained by the Finance Division, specifically the general ledgers, as the source of financial data for the quarterly and annual reports for the Washington HAF program. • Required third parties to develop or update a program manual regarding data used for reporting purposes. The manual incorporated recommendations of the audit finding. As of June 30, 2024, the Commission consulted with the U.S. Department of the Treasury to determine if revision and resubmission of the reports are necessary to correct amounts reported. No corrective action was required. The conditions noted in this finding were previously reported in finding 2023-024. Completion Date: June 2024 Agency Contact: Lucas Loranger Senior Finance Director 1000 Second Ave, Suite 2700 Seattle, WA 98104-3601 (206) 464-7139 Lucas.Loranger@wshfc.org

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Corrective Action Plans

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