2024-001 The District did not have adequate internal controls and did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 93.354 COVID 19 - Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Fe...
2024-001 The District did not have adequate internal controls and did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 93.354 COVID 19 - Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Federal Grantor Name: Department of Centers for Disease Control and Prevention, Health and Human Services Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Health Pass-through Award/Contract Number: CLH31004 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2024, the District spent $321,653 in Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response program funds. The intent of this program is to fund state, local and territorial public health departments for public health emergencies having an overwhelming impact on jurisdictional resources. These emergencies require federal support to effectively respond to, manage and address a significant public health threat. In addition to immediate response activities, this program provides a mechanism to accelerate readiness for an impending infectious disease threat or other public health crises identified on the event horizon. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The District may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The District must verify this before entering into the contract, and must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Although the District has a process to verify the suspension and debarment status for contractors it pays more than $25,000, our audit found the District did not follow this process and did not verify all contractors were not suspended or debarred before purchasing from them. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Although District staff were aware of the requirements, they could not locate documentation to show they verified the contractor’s suspension and debarment status before entering into the contract or purchasing from them. Effect of Condition The District did not obtain a written certification from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify contractors it paid $74,738 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the District made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District strengthen its internal controls to verify all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and maintain documentation demonstrating compliance with this requirement. District’s Response The Health District concurs with the finding. While the issue was limited to documentation of verification timing, we recognize the importance of maintaining clear evidence that suspension and debarment checks are completed prior to entering into contracts or issuing payments under federally funded programs. To strengthen our internal controls and ensure full compliance with federal requirements, the District has developed and initiated the following corrective actions, consistent with our attached Corrective Action Plan: 1. Formal Verification Procedure: A new written procedure now requires verification of all contractors receiving $25,000 or more in federal funds through the System for Award Management (SAM.gov) prior to contract execution or payment. 2. Contractor Attestations: Contracts will include clauses affirming that vendors are not suspended or debarred, and contractors must provide written certification confirming compliance. 3. Documentation Retention: Verification evidence—including dated SAM.gov screenshots or printed reports—will be maintained in each contractor’s procurement file. 4. Staff Training: Fiscal and procurement personnel have received updated training to reinforce understanding of suspension and debarment requirements and the new verification process. 5. Internal Review: Supervisory review procedures have been updated to confirm verification and documentation completion before disbursement of federal funds. The District anticipates completing full implementation of these corrective measures by November 07, 2025. Auditor’s Remarks We appreciate the District’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.