Corrective Action Plans

Finding 397404 (2023-047)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Procurement, Suspension & Debarment Subrecipient Monitoring

Finding: The Department of Health did not have adequate internal controls over and did not comply with suspension and debarment requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases program. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Amount $0 ...

Finding: The Department of Health did not have adequate internal controls over and did not comply with suspension and debarment requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases program. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: During the COVID-19 pandemic, the Department operated under a competitive procurement waiver in order to expedite funding to critical partners throughout the state. Efforts to accelerate contracts combined with the misperception that Educational Service Districts (ESD) are an extension of the Office of Superintendent of Public Instruction prompted the decision to use an Interagency Agreement, and no suspension and debarment check was performed at the time the contract was signed. This was an isolated occurrence, and the Department has corrected the error moving forward to include the suspension and debarment clause with all ESD contracts. Completion Date: July 2023 Agency Contact: Jeff Arbuckle External Audit Manager PO Box 47890 Olympia, WA 98504-7890 (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

View Audit 306534

Finding 397403 (2023-046)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles § 200.516

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 Epidemiology and Laboratory Capacity for Infectious Diseases program. Questioned Costs: Assistance ...

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 Epidemiology and Laboratory Capacity for Infectious Diseases program. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Amount $1,735 Status: Corrective action not taken Corrective Action: The Department does not concur with the finding. The Department disagrees with the State Auditor’s Office (SAO) assessment of a material weakness in internal controls over the consolidated contract provider payment process for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program. The Department has established processes in place to ensure payments are allowable and meet cost principles for the program. These include: • Perform annual review and approval of detailed subrecipient budgets. • Compare invoice amounts to budgeted amounts for reasonableness before payment approval. • Provide subrecipients with regular technical assistance and training on applicable policies related to fiscal and programmatic processes. • Conduct biennial program and fiscal monitoring visits to subrecipients as part of the Department’s monitoring procedures. In addition, the ELC program has monitoring controls in place and evidence of review at the program level. Program staff maintain a detailed spreadsheet that documents review and approval and includes any amounts that need to be withheld until issues with invoice support are resolved. These reviews are to be completed within the 10-day period before payment is released. The Department is planning on meeting with federal grantors to work through the exceptions and questioned costs identified in the finding. The conditions noted in this finding were previously reported in finding 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 306534 Questioned Costs: $1

Finding 397398 (2023-045)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Internal Control / Segregation of Duties

Finding: The Department of Health did not have adequate internal controls over and did not comply with requirements to ensure it filed accurate and timely reports required by the Federal Funding Accountability and Transparency Act for the Immunization Cooperative Agreements program. Questioned C...

Finding: The Department of Health did not have adequate internal controls over and did not comply with requirements to ensure it filed accurate and timely reports required by the Federal Funding Accountability and Transparency Act for the Immunization Cooperative Agreements program. Questioned Costs: Assistance Listing # 93.268 93.268 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department agrees with the finding. In response to the prior year’s finding, the Department implemented procedures to ensure Federal Funding Accountability and Transparency Act (FFATA) reports are submitted timely, and management performs and documents review of the reports before submission in the FFATA Subaward Reporting System (FSRS). These include using the signature date of the subaward documents as the obligation date to ensure timely submission of the FFATA reports. Due to the timing of the audit, the above procedures were not in place during all of state fiscal year 2023, which resulted in some of the exceptions noted by the auditors. As stated in the finding’s Cause of Condition, the subaward amendments were submitted late because the transition of the Data Universal Numbering System number to Unique Entity Identifier had caused significant delays for sub-awardees to provide the updated identifier information for reporting in FSRS. The conditions noted in this finding were previously reported in finding 2022-032. Completion Date: October 2022 Agency Contact: Jeff Arbuckle External Audit Manager PO Box 47890 Olympia, WA 98504-7890 (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

View Audit 306534

Finding 397397 (2023-044)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles § 200.516

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 $416,027 Status: Corrective action not taken Corrective Action: The Department does not concur with the finding. The Department disagrees with the State Auditor’s Office (SAO) assessment of a material weakness in internal controls over the consolidated contract provider payment process for the Immunizations Cooperative Agreements program. The level of documentation received from the subrecipient accounting system provided assurance that the exceptions questioned by SAO met federal cost principles for allowability and period of performance. The Department has established processes in place to ensure payments are allowable and meet cost principles for the program. These include: • Program staff maintain 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 submitted. • Program staff refer to the federal Immunization Program Operations Manual to determine procedures related to allowable costs, purchases, and procurement. • The Fiscal Monitoring Unit provides technical assistance and training to program staff and subrecipients while onsite and at the request of the entities receiving funding. • Program staff provides policy guidance, technical assistance, and training to subrecipients related to program compliance requirements. The program has continued to strengthen processes to ensure supporting documentation aligns with the agency’s documentation matrix for subrecipients in accordance with assigned risk level. The Department is planning on meeting with federal grantors to work through the exceptions and questioned costs identified in the finding. The conditions noted in this finding were previously reported in finding 2022-031. 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 306534 Questioned Costs: $1

Finding 397362 (2023-043)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles § 200.521

Finding: The University of Washington did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Global AIDS program received required single or program-specific audits, and that it followed up on findings and issued management decisions...

Finding: The University of Washington did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Global AIDS program received required single or program-specific audits, and that it followed up on findings and issued management decisions. Questioned Costs: Assistance Listing # 93.067 Amount $0 Status: Corrective action in progress Corrective Action: Completion Date: The University uses an initial certification process to determine whether a subrecipient is subject to the single audit and requests a copy of or link to the online audit report. If the subrecipient is not subject to the single audit, a series of questions are asked and a risk assessment is carried out based on the information gathered. The University does not have an automatic annual process to determine if a subrecipient has received the required single or program-specific audits. Rather, the University relies on the terms of the subaward, which requires the subrecipient to certify that they: • Continue to comply with the Uniform Guidance requirements. • Notify the University of adverse findings. • If not subject to the single audit, provide copies of the most recent program audit or other financial statement audit to allow the University to assess internal controls. To address the audit finding, the University updated the initial certification form to allow for a more definitive determination of whether a subrecipient is subject to the single audit. The University will also strengthen internal controls by: • Verifying with publicly available information to confirm if the audit requirement is applicable. • Implementing an annual assessment for each active federal subaward utilizing questionnaire and publicly available information to be aware of any findings or questioned costs. • Updating tracking mechanism to document each initial and ongoing assessment. The University will continue to issue written management decisions for all applicable audit findings and ensure subrecipients develop and perform acceptable corrective actions to address all audit recommendations. The conditions noted in this finding were previously reported in finding 2022-030. Estimated December 2024 Agency Contact: Erick Winger Controller 4300 Roosevelt Way NE Seattle, WA 98105-4718 (206) 543-5322 erickw@uw.edu

View Audit 306534

Finding 397361 (2023-042)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The University of Washington did not have adequate internal controls over and did not comply with requirements to ensure it filed reports required by the Federal Funding Accountability and Transparency Act. Questioned Costs: Assistance Listing # 93.067 Amount $0 Status: Corrective...

Finding: The University of Washington did not have adequate internal controls over and did not comply with requirements to ensure it filed reports required by the Federal Funding Accountability and Transparency Act. Questioned Costs: Assistance Listing # 93.067 Amount $0 Status: Corrective action in progress Corrective Action: The University acknowledges that two reports were submitted late, and therefore not in compliance with Federal Funding Accountability and Transparency Act (FFATA) requirements. As of November 2023, the University submitted the two reports in the FFATA Subaward Reporting System and performed a review of all active subawards to ensure no other reports were required. The University is still working on developing automatic internal reports to assist in the identification and review of FFATA-reportable actions. Implementation of this process is expected to occur in the fiscal year 2025. Meanwhile, the University is working toward implementing additional steps to: • Strengthen identification of subawards meeting the threshold for FFATA reporting through manual assessment or ad-hoc reports. • Improve tracking of submitted FFATA reports. • Strengthen management’s monitoring process through a secondary review by the leadership team. The automatic reports, once developed, will replace the manual process described above. The conditions noted in this finding were previously reported in finding 2022-029. Completion Date: Estimated December 2024 Agency Contact: Erick Winger Controller 4300 Roosevelt Way NE Seattle, WA 98105-4718 (206) 543-5322 erickw@uw.edu

View Audit 306534

Finding 397352 (2023-038)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

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

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal reporting requirements for the Education Stabilization Fund program. Questioned Costs: Assistance Listing # 84.425D 84.425R 84.425U 84.425V 84.425W Amount $0 ...

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with federal reporting requirements for the Education Stabilization Fund program. Questioned Costs: Assistance Listing # 84.425D 84.425R 84.425U 84.425V 84.425W Amount $0 Status: Corrective action in progress Corrective Action: Certain data elements missing on the annual Elementary and Secondary School Emergency Relief (ESSER) performance report was not due to lack of internal controls, but rather a result of: • Late publication of the federal reporting template which did not allow timely collection of cost details from school districts. • Non-alignment of reporting time frame with school district fiscal year and the decision against assumptions of state level expenditure for reporting. To address the audit recommendations, the Office is organizing a series of webinars and trainings for school districts, so they are prepared to annually submit required key information directly to the Office for ESSER reporting. Through these training events, the Office’s fiscal team can answer questions and assist districts to ensure timely and accurate reporting and comply with federal requirements. The Office has been having ongoing conversations with the U.S. Department of Education regarding federal reporting on the ESSER funds. At this time, there is no indication that the grantor will request the information to be resubmitted. Completion Date: Estimated June 2024 Agency Contact: TJ Kelly Chief Financial Officer PO Box 47200 Olympia, WA 98504-7200 (360) 725-6301 Thomas.Kelly@k12.wa.us

View Audit 306534

Finding 397351 (2023-037)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Internal Control / Segregation of Duties Matching / Level of Effort / Earmarking

Finding: The Office of Financial Management did not have adequate internal controls over and did not comply with federal level of effort requirements for the Education Stabilization Fund program. Questioned Costs: Assistance Listing # 84.425D 84.425R 84.425U 84.425V 84.425W Amount $0 Status: C...

Finding: The Office of Financial Management did not have adequate internal controls over and did not comply with federal level of effort requirements for the Education Stabilization Fund program. Questioned Costs: Assistance Listing # 84.425D 84.425R 84.425U 84.425V 84.425W Amount $0 Status: Corrective action not required Corrective Action: The Office does not concur with the audit finding. The Office maintains monthly monitoring details on agency expenditures. The expenditure data has not changed since the close of the fiscal year. The finding was based on preliminary information and data that the auditors obtained in November 2023. In December 2023, the Office submitted updated expenditure data to the Office of Elementary and Secondary Education (OESE) in accordance with OESE guidance to correctly include every budgeted funding source in the maintenance of effort (MOE) calculations. The Office met the MOE requirement for fiscal year 2023; therefore, there is no need for a waiver request. The Office will also continue to work with the Legislature, which is the state-level authority for state appropriations, to ensure the state maintains the MOE requirements. Completion Date: Not applicable Agency Contact: Sara Rupe Deputy Statewide Accounting Director PO Box 43127 Olympia, WA 98504-3127 (360) 974-9252 sara.rupe@ofm.wa.gov

View Audit 306534

Finding 397349 (2023-033)

Significant Deficiency 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Reporting Matching / Level of Effort / Earmarking

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls to ensure it filed all reports required by the Federal Funding Accountability and Transparency Act for the Title I, Part A program. Questioned Costs: Assistance Listing # 84.010 Amount $0 Status...

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls to ensure it filed all reports required by the Federal Funding Accountability and Transparency Act for the Title I, Part A program. Questioned Costs: Assistance Listing # 84.010 Amount $0 Status: Corrective action complete Corrective Action: In response to the audit finding, the Office: • Established effective internal controls to ensure all required Federal Funding Accountability and Transparency Act reports are submitted. This includes ensuring Title IA is included in the cross-check of all federal programs after manual entries have been completed in the Subaward Reporting System. • Ensures management monitors reporting of this information monthly to ensure future reports are submitted completely and accurately. Completion Date: October 2023 Agency Contact: Michelle Sartain Grants Management Supervisor PO Box 47200 Olympia, WA 98504-7200 (360) 742-2045 Michelle.sartain@k12.wa.us

View Audit 306534

Finding 397222 (2023-032)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Cash Management § 200.332

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to ensure it communicated federal award identification elements to subrecipients of the Coronavirus State and Local Fiscal Recovery Fund. Questioned Costs: Assistance Listing # ...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to ensure it communicated federal award identification elements to subrecipients of the Coronavirus State and Local Fiscal Recovery Fund. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: During 2022, the Department identified the need to determine subrecipient and contractor classifications on the face sheet of all contracts. The Department implemented the following actions: • Added a check box to all federal contract template face sheets to designate whether a contract is issued to a subrecipient or contractor. • Added all federal subaward required data elements to the face sheet. Completion Date: October 2022 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 306534

Finding 397221 (2023-031)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring § 200.332

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform risk assessments for subrecipients of the Coronavirus State and Local Fiscal Recovery Funds. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $0 Sta...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform risk assessments for subrecipients of the Coronavirus State and Local Fiscal Recovery Funds. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $0 Status: Corrective action not taken Corrective Action: The Department does not concur with the audit finding. The Legislature appropriated Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to the Department’s Energy Division to award assistance to utility service providers to eliminate customer account arrearages. The Department maintains that internal controls were in place for the program requirements. A risk assessment was not necessary because all utility providers who applied and served eligible citizens were awarded funding. Payments for the program ended in 2022 and the program is no longer funded by the Department. As a result, the Department does not plan to implement any corrective action. Similar conditions noted in this finding were previously reported in finding 2022-021 for the Emergency Rental Assistance program which was also funded by SLFRF. Completion Date: Not applicable 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 306534

Finding 397220 (2023-030)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Internal Control / Segregation of Duties Procurement, Suspension & Debarment § 200.328

Finding: The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $0 Status: Corrective action comp...

Finding: The Office of Financial Management did not have adequate internal controls over and did not comply with reporting 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 Office has continued to strengthen internal controls for the Coronavirus State and Local Fiscal Recovery Fund (SLFRF) reporting to ensure compliance with the federal requirements. The Office will continue to: • Monitor updates to the U.S Treasury’s Project and Expenditure Report User Guide. • Improve the quarterly reporting template and assist state agencies during the reporting process. • Communicate with agencies to remind them of the requirement to maintain adequate supporting documentation for all reports, including quarterly reported obligations. • Ensure reported amounts, including corrections or adjustments made during the reporting period, are properly tracked and documented for the subsequent reporting cycles. • Perform reconciliations of reported expenditures to ensure agency expenditures are accurately reported, allowing for adjustments/ corrections required due to issues with the reporting system. • Ensure reported expenditures and supporting accounting records are adequately reviewed by management before the information is uploaded to the federal reporting system. • Document correspondences with the U.S. Treasury when system errors are identified and resolutions recommended by the grantor, if received. The conditions noted in this finding were previously reported in finding 2022-020. Completion Date: January 2024 Agency Contact: Sara Rupe Deputy Statewide Accounting Director PO Box 43127 Olympia, WA 98504-3127 (360) 974-9252 sara.rupe@ofm.wa.gov

View Audit 306534

Finding 397219 (2023-029)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

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

Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported and met period of performance requirements for the Coronavirus State and Local F...

Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments 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 $312,659,850 Status: Corrective action in progress Corrective Action: The Department partially concurs with the finding. The Department’s Office of Refugee and Immigrant Assistance (ORIA) administered this funding through the Washington COVID-19 Immigrant Relief Fund program and contracted with a subrecipient organization to conduct eligibility determinations to approve and disburse funds to undocumented immigrants. This program is now closed, with all subrecipient contracts ended and the final payments sent in early 2023. The Department is taking action to strengthen internal controls over subrecipient monitoring for ORIA’s contracts. By July 2024, the Department will: • Complete a review of all active contracts utilizing federal funding to ensure subrecipients are accurately identified. • Explore the feasibility of increasing ORIA and Economic Services Administration accounting staff resources to support the workload increase associated with monitoring subrecipients. By October 2024, the Department will convene a work group with contracts and accounting staff to create effective internal controls and written procedures for fiscal and program monitoring of ORIA’s subrecipient contracts. This will include the following: • Verify the subrecipient status for each contract is correctly determined and recorded in the Agency Contracts Database. • Include the required subrecipient language in the contract. • Obtain a copy of the indirect rate certification or cost allocation plan from the subrecipient. • Complete risk assessments. • Create appropriate monitoring plans for each subrecipient. • Conduct fiscal monitoring of each subrecipient to obtain assurance that the use of federal funds complies with federal laws and regulations. • Create corrective action plans when required. By January 2025, the Department will ensure all ORIA program staff responsible for monitoring receive training on the updated procedures. In addition, the Office of the Secretary will request the Department’s Internal Audit and Consultation office conduct an internal audit of ORIA to ensure the program implements strong internal controls, properly accounts for federal funds, and materially complies with federal requirements. The Department does not concur with the questioned costs. The funds were used to assist Washington workers/families who were affected by the COVID-19 pandemic but were unable to access federal stimulus programs and other social support due to their immigration status. Repayment of these funds would only hinder the state’s ability to provide critical services to our clients. If the grantor contacts the Department regarding the questioned costs, the Department will discuss this with the Department of Health & Human Services and will take additional action as appropriate. Completion Date: Estimated January 2025 Agency Contact: Richard Meyer External Audit Compliance Manager PO Box 45804 Olympia, WA 98504-5804 (360) 664-6027 Richard.Meyer@dshs.wa.gov

View Audit 306534 Questioned Costs: $1

Finding 397218 (2023-028)

Material Weakness 2023

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 requirements to monitor subrecipients and to ensure payments were allowable, properly supported, and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Fu...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to monitor subrecipients and to ensure payments 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 $75,251,225 Status: Corrective action in progress Corrective Action: Completion Date: Agency Contact: The Legislature appropriated Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to the Department’s Energy Division to award assistance to utility service providers to eliminate customer account arrearages. Payments for the program ended in 2022 and the program is no longer funded by the Department. The Department will implement procedures to strengthen internal controls for future programs managed by the Energy Division to ensure payments to subrecipients are adequately supported, allowable, and only reimburse costs incurred during the grant period of performance. As part of the audit resolution process, the Department will: • Work with utilities to obtain official client arrearage reports to verify the amounts paid and the period in which they were incurred. • Verify all households served were eligible per U.S. Treasury guidance. • Reconcile all allowable and unallowable expenditures. • Consult with the grantor to discuss the resolution of any questioned costs identified. Estimated July 2024 Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 306534 Questioned Costs: $1

Finding 397217 (2023-027)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles § 200.1 § 200.410 § 200.516

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments were allowable, properly supported and met period of performance requirements for the Coronavirus State and Local Fiscal Recovery Fun...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements for monitoring subrecipients to ensure payments 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 $95,560 Status: Corrective action complete Corrective Action: The Department’s Eviction Rental Assistance program which was funded with the Coronavirus State and Local Fiscal Recovery Funds ended in June 2023. During the audit period, the Department implemented procedures to strengthen internal controls to ensure expenditures were allowable, properly supported, and in compliance with the subrecipient fiscal monitoring requirements. The Department’s Homelessness Assistance Unit implemented the following corrective actions: · Updated unit reimbursement procedures to include a requirement for supporting documentation that details transaction level expenditure information for direct expenses that reconciles to payment requests. · Provided training to staff on reviewing transaction level supporting documentation to ensure expenditures reconcile with reimbursement requests and are within the period of performance. · Added a review note to each reimbursement request to document the grant coordinator’s review of documentation and reconciliation to payment requests. · Worked with the Department’s internal control officer for review and feedback of the updated procedures. The Department is currently working to standardize a reimbursement documentation process that is in compliance with federal requirements. The Department will discuss any repayment of questioned costs through the normal audit resolution process with the Department of Treasury. The conditions noted in this finding were previously reported in finding 2022-019. Completion Date: April 2024 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 306534 Questioned Costs: $1

Finding 397216 (2023-026)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Questioned Costs Allowable Costs / Cost Principles Subrecipient Monitoring § 200.334 § 200.335 § 200.336 § 200.337

Finding: The Office of Financial Management did not have adequate internal controls over and did not comply with requirements to ensure Coronavirus State and Local Fiscal Recovery Funds were used for only allowable activities. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $30...

Finding: The Office of Financial Management did not have adequate internal controls over and did not comply with requirements to ensure Coronavirus State and Local Fiscal Recovery Funds were used for only allowable activities. Questioned Costs: Assistance Listing # 21.027 COVID-19 Amount $300,000,000 Status: Corrective action not taken Corrective Action: The Office does not concur with the audit finding. The state of Washington implemented internal controls and created Fund 706 to track the Coronavirus State and Local Fiscal Recovery Fund (SLFRF) expenditures. The state, through legislation, approved the transfer of $300 million from the SLFRF account to various state transportation accounts under the revenue loss provision. The Office reaffirms that all expenditures from the transportation accounts that received the SLFRF funds were used to maintain government services. The State Administrative and Accounting Manual requires all state agencies to establish internal controls over payments for goods and services, including ensuring payments are lawful and for proper purposes, reviewing payments to ensure they are supported, as well as documenting the review of all payments. State agencies continued to follow their established internal controls to ensure expenditures from the transportation accounts were proper and allowable for both non-SLFRF and SLFRF funds. The Office will continue to: • Work with the U.S. Treasury, through the audit resolution and management decision process, to ensure no questioned costs are required to be repaid. • Document all correspondence with the grantor during the audit resolution process. The conditions noted in this finding were previously reported in finding 2022-018. Completion Date: Not applicable Agency Contact: Sara Rupe Deputy Statewide Accounting Director PO Box 43127 Olympia, WA 98504-3127 (360) 974-9252 sara.rupe@ofm.wa.gov

View Audit 306534 Questioned Costs: $1

Finding 397211 (2023-025)

Material Weakness 2023

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 in progress Corrective...

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 in progress Corrective Action: To address the deficiencies identified by the auditors in completing annual performance reports, the Commission has taken the following corrective actions to strengthen controls over reporting for the Homeowner Assistance Fund (HAF) program: • Homeownership Division and Finance Division staff will perform regular reconciliation of records to identify any discrepancies and to ensure all records are complete and accurate. • The records maintained by the Finance Division, specifically the general ledgers, are the designated source of financial data for the quarterly and annual reports for the Washington HAF program. • Third parties are required to develop or update a program manual regarding data used for reporting purposes by June 30, 2024. The manual needs to incorporate recommendations of the audit finding. • Any supporting data obtained from a third party needs to be vetted by the third party and the Homeownership Division staff. • Leadership (division manager or above) will perform final review of data as well as the quarterly or annual report to be submitted to the grantor. By June 30, 2024, the Commission will consult with the U.S. Department of the Treasury to determine if revision and resubmission of the reports are necessary to correct amounts reported. The Commission will follow the audit resolution process as determined by the grantor. Completion Date: Estimated 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

View Audit 306534

Finding 397210 (2023-024)

Material Weakness 2023

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 in progress Corrective...

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 in progress 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: • The Homeownership Division and Finance Division staff will perform regular reconciliation of records to identify any discrepancies and to ensure all records are complete and accurate. • The records maintained by the Finance Division, specifically the general ledgers, are the designated source of financial data for the quarterly and annual reports for the Washington HAF program. • Third parties are required to develop or update the program manual regarding data used for reporting purposes by June 30, 2024. The manual needs to incorporate recommendations of the audit finding. • Any supporting data obtained from a third party needs to be vetted by the third party and the Homeownership Division staff. • Leadership (division manager or above) will perform final review of data as well as the quarterly or annual report to be submitted to the grantor. By June 30, 2024, the Commission will consult with the U.S. Department of the Treasury to determine if revision and resubmission of the reports are necessary to correct amounts reported. The Commission will follow the audit resolution process as determined by the grantor. Completion Date: Estimated 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

View Audit 306534

Finding 397209 (2023-023)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

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

Finding: The Housing Finance Commission did not have adequate internal controls over earmarking requirements for the Homeowner Assistance Fund program. Questioned Costs: Assistance Listing # 21.026 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Commissio...

Finding: The Housing Finance Commission did not have adequate internal controls over earmarking requirements for the Homeowner Assistance Fund program. Questioned Costs: Assistance Listing # 21.026 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Commission will take the following corrective actions to strengthen controls over earmarking requirements for the Homeowner Assistance Fund (HAF) program: • Develop a system to track and monitor expenditures in relation to overall program expenditures to ensure earmarking requirements are within allowable parameters. • Select an increased percentage of approved, denied, and withdrawn HAF applications that have previously been reviewed by the contractor, as part of the Quality Control process, for a secondary review by program staff. • Review a selection of HAF applications independent of the Quality Control process performed by the contractor. • Review a selection of approved HAF applications prior to disbursing funds to confirm eligibility determinations are proper. Completion Date: Estimated 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

View Audit 306534

Finding 397208 (2023-022)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Eligibility Internal Control / Segregation of Duties

Finding: The Housing Finance Commission did not have adequate internal controls over eligibility requirements for the Homeowner Assistance Fund program. Questioned Costs: Assistance Listing # 21.026 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Commissi...

Finding: The Housing Finance Commission did not have adequate internal controls over eligibility requirements for the Homeowner Assistance Fund program. Questioned Costs: Assistance Listing # 21.026 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Commission will take the following corrective actions to strengthen controls over eligibility requirements for the Homeowner Assistance Fund (HAF) program: • Select an increased percentage of approved, denied, and withdrawn HAF applications that have previously been reviewed by the contractor, as part of the Quality Control process, for a secondary review by program staff. • Review a selection of HAF applications independent of the Quality Control process performed by the contractor. • Review a selection of approved HAF applications prior to disbursing funds to confirm eligibility determinations are proper. Completion Date: Estimated 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

View Audit 306534

Finding 397207 (2023-021)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Internal Control / Segregation of Duties

Finding: The Department of Commerce did not have adequate internal controls over federal requirements to ensure subawards for the Emergency Rental Assistance program contained the correct federal award identification elements. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $0 St...

Finding: The Department of Commerce did not have adequate internal controls over federal requirements to ensure subawards for the Emergency Rental Assistance program contained the correct federal award identification elements. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: During 2022, the Department identified the need to determine subrecipient and contractor classifications on the face sheet of all contracts. The Department implemented the following actions: • Added a check box to all federal contract template face sheets to designate whether a contract is issued to a subrecipient or contractor. • Added all federal subaward required data elements to the face sheet. The Department followed these updated procedures until the program ended June 30, 2023. Completion Date: October 2022 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525-2525 Olympia, WA 98504 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 306534

Finding 397206 (2023-020)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with subrecipient monitoring requirements for the Emergency Rental Assistance program. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $0 Status: Corrective action complete C...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with subrecipient monitoring requirements for the Emergency Rental Assistance program. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The U.S. Department of Treasury funding for this federal program ended June 30, 2023. As a result of a similar finding issued in fiscal year 2022, the Department has implemented procedures to strengthen internal controls to ensure compliance with the subrecipient fiscal monitoring requirements and confirm expenditures are allowable and properly supported. In fiscal year 2023, the program hired a new employee to assist with program monitoring duties. As of January 2024, the Department implemented the following procedures: • Increased the number of client files reviewed during program monitoring from five to ten for each grantee. • Expanded monthly monitoring to include the collection and review of specific back-up documentation to accompany all payment requests to ensure payments are allowable and properly supported. Completion Date: January 2024 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 306534

Finding 397205 (2023-019)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Reporting Subrecipient Monitoring Internal Control / Segregation of Duties

Finding: The Department of Commerce did not have adequate internal controls over reporting requirements for the Emergency Rental Assistance program. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department has imple...

Finding: The Department of Commerce did not have adequate internal controls over reporting requirements for the Emergency Rental Assistance program. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department has implemented procedures to strengthen internal controls and eliminate possible errors to ensure required approval of quarterly financial reports (SF-425) is documented within the Contracts Management System (CMS). The Accounting Department is responsible for the completion of the SF-425. Accounting management staff, or their delegate, utilize a newly created tracking log to document the date approval is submitted within CMS. The documentation of approval confirms the completion of management review prior to submission of the report. Funding for this program ended June 30, 2023. The Department will follow these updated procedures for other federal programs with similar reporting requirements. The conditions noted in this finding were previously reported in finding 2022-017. Completion Date: October 2023 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 306534

Finding 397204 (2023-018)

Material Weakness 2023

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 Commerce did not have adequate internal controls over and did not comply with reporting requirements for the Emergency Rental Assistance program. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $0 Status: Corrective action complete Corrective Actio...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with reporting requirements for the Emergency Rental Assistance program. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: In November 2023, the Homelessness Assistance Unit implemented the following procedures to strengthen internal controls and ensure compliance with reporting requirements for federal programs: • Monthly expenditures are reviewed and approved by the program coordinator and federal team manager before being submitted into the federal reporting system. The expenditure approval is documented via email. • Annual report data is reviewed and approved by the federal team manager and documented via email. • Annual federal reports are submitted to the required federal department and are saved and posted to the Commerce webpage. Funding for this program ended June 30, 2023. The Department will follow these updated procedures for other federal programs with similar reporting requirements. The conditions noted in this finding were previously reported in finding 2022-017. Completion Date: November 2023 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 306534

Finding 397203 (2023-017)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles § 200.1 § 200.403 § 200.410 § 200.516

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to ensure payments to subrecipients of the Emergency Rental Assistance program were allowable and properly supported. Questioned Costs: Assistance Listing # 21.023 COVID-19 A...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to ensure payments to subrecipients of the Emergency Rental Assistance program were allowable and properly supported. Questioned Costs: Assistance Listing # 21.023 COVID-19 Amount $4,123,486 Status: Corrective action complete Corrective Action: The funding for the Emergency Rental Assistance program ended on June 30, 2023. The Department is no longer funding this program. To address the control deficiencies reported in the prior year’s finding, the Department improved internal control processes, resulting in improved compliance. The Department strives to meet all federal requirements and any repayment of questioned costs will be determined through the normal audit resolution process with the U.S. Treasury. The conditions noted in this finding were previously reported in finding 2022-016. Completion Date: July 2023 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 306534 Questioned Costs: $1

Corrective Action Plans

Filters