Corrective Action Plans

Finding 397431 (2023-069)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Reporting Internal Control / Segregation of Duties

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over reporting requirements for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Departm...

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over reporting requirements for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department partially concurs with the finding. The Department acknowledges that errors were made in the crosswalks and quarterly reports submitted during the audit period. To address the auditor’s specific finding, the Department has: • Reviewed and updated all electronic versions of the quarterly crosswalks for accuracy. • Submitted corrections for the federal fiscal year 2023 Quarter 3 report. The conditions noted in this finding were previously reported in finding 2022-051. Completion Date: February 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 397430 (2023-068)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Eligibility Internal Control / Segregation of Duties

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure group care facility employees and adults residing in prospective caregivers’ households had cleared background checks before having unsupervised access to children. Questioned Costs: Assist...

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure group care facility employees and adults residing in prospective caregivers’ households had cleared background checks before having unsupervised access to children. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department partially concurs with the finding. The auditors identified two exceptions where fingerprint checks for two family foster home adults were completed two days later than the required timeline of 15 calendar days. The delay was due to the misspelling of one applicant’s last name in the system. Upon correction, the applicants subsequently completed the fingerprint checks and were determined eligible. As stated in the finding’s Cause of Condition, the Department developed a corrective action plan to address the internal control deficiencies in response to the prior year’s finding which had not been fully implemented within the current audit period. The Department is confident that all staff who work with children and youth have cleared background checks. As of April 1, 2023, the Department implemented a new process for processing background checks for group care facilities to strengthen internal controls, documentation, and clarification on the “effective date.” The updated process is outlined below: • A new form was created with clear instructions for the group care facilities to provide the applicant/employee information, including the background check confirmation code, directly to the Department’s Background Check Unit (BCU). • The BCU works with the applicant/employee through the fingerprint background check process. • The results are sent directly to the BCU, at which time they complete a child abuse/neglect history check and if needed a suitability assessment. The BCU documents the results in FamLink with the date the background check is completed. • The BCU emails the results to the group care facility and the Department’s Licensing Division (LD) group. If the applicant/employee is cleared and is not a renewal, LD staff adds the applicant/employee to the group care facility in FamLink with the clearance information attached. The conditions noted in this finding were previously reported in finding 2022-050. Completion Date: April 2023 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 397429 (2023-067)

Significant Deficiency 2023

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 Amoun...

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 Amount $0 Status: Corrective action in progress 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 utilizes FamLink as the case management system for the Foster Care program which, due to system limitations, did not have the reporting capabilities to track rate setting reviews during the audit period. To assist with tracking rate setting requirements, the Department: • Created a new report in FamLink to assist rate assessors in identifying six-month reviews that have not been performed timely. • Implemented monthly tracking by supervisors to assist with internal controls and compliance. In response to the auditor’s recommendations and to assist in compliance, the Department has submitted a request to the technical team for an update to the report to also show when the next rate assessment is due. Completion Date: Estimated 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 397428 (2023-066)

Significant Deficiency 2023

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 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 Amo...

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 Amount $0 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 was unable to fully implement the prior corrective action plan during the audit period. In April 2023, the Fiscal Integrity Unit collaborated with other divisions to implement the following internal controls: • Utilized algorithms in the Sprout system to identify reimbursement requests outside of a reasonable amount. • Required providers to submit additional documentation or explanation for those identified amounts. • Implemented a re-run process for prior billing periods to eliminate potential double billings by providers. • Trained headquarters and field office accounting staff to utilize the new algorithms and review additional documentation prior to processing payments. • Required program staff review and approval of all vendor invoices prior to release of payment for the Eastern Washington regions. In January 2024, the Fiscal Integrity Unit identified and implemented regional program approvals for Western Washington providers. The Contracts office has also taken the following actions: • In August 2023, filled one vacant staff position dedicated to reviewing child welfare contracts to include family time visit payments. • In November 2023, developed compliance audit plans for child welfare contracts and began fiscal monitoring of family time visit payments. • In December 2023, filled an additional vacant staff position dedicated to reviewing child welfare contracts. The conditions noted in this finding were previously reported in findings 2022-048 and 2021-040. Completion Date: January 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 397427 (2023-065)

Material Weakness 2023

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 Status: Corrective action complete Correct...

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 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 September 2022 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 all cost base 100 workbooks have been properly completed for the state fiscal year 2024. The conditions noted in this finding were previously reported in finding 2022-047. Completion Date: March 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 397423 (2023-057)

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 requirements to perform risk assessments and monitor subrecipients of the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 ...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform risk assessments and monitor subrecipients of the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department has two programs that administer and award Low-Income Home Energy Assistance Program (LIHEAP) funds: the Energy Assistance program and the Weatherization program. There were no issues identified with the Energy Assistance program. The Weatherization program has improved its risk assessment process to include the following: • Provided proper training and development to new program staff to ensure risk assessments are completed on time. • Expanded the list of approvers for all steps within the risk assessment process, including supervisors, to demonstrate a thorough review process is in place. The Weatherization program has improved the monitoring process by incorporating the following: • Perform monitoring visits of all subrecipients per federal requirements two times per year instead of one. • Complete a full review and assessment of the monitoring process by the Compliance Manager and monitoring team. • Update all monitoring related forms, tools, and protocols to ensure accuracy, consistency, and completeness. The updated protocols will be in place in program year 2024. • Maintain an expanded list of approvers, including supervisors, for all steps within the monitoring process. • Continue to monitor all subrecipients at a level that exceeds federal program requirements of 5% of completed units. • Create a plan for addressing the monitoring frequency of high-risk subrecipients. • Monitor all associated funding sources to ensure compliance with program rules. • Utilize our data system and monitoring activities to evaluate the objectives for monitoring LIHEAP funds in the Weatherization program. 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

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Finding 397422 (2023-056)

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 federal requirements to ensure subawards for the Low-Income Home Energy Assistance Program contained the federal award identification elements. Questioned Costs: Assistance Listing # 93.568 93...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subawards for the Low-Income Home Energy Assistance Program contained the federal award identification elements. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department has two programs that administer and award Low-Income Home Energy Assistance Program (LIHEAP) funds: the Energy Assistance program and the Weatherization program. The Energy Assistance program created a plan to improve the documentation and communication regarding required federal award identification elements to ensure compliance with 2 CFR 200.332, which outlines requirements for pass-through entities. For all contracts: • The Federal Award Identification Number (FAIN) will be included on the face sheet, information sheet, and section one in each contract. This will eliminate errors resulting from multiple federal awards being issued from a single contract. • The information will be entered by the LIHEAP Commerce Specialist and reviewed by the LIHEAP Program Manager and the Community and Economic Opportunities Managing Director prior to execution of each contract. The Weatherization program will also follow this process to correct similar deficiencies reported by the auditors. In the spring of 2023, the Department instituted an agency-wide process to comply with the Requirements for Pass Through Entities in 2 CFR 200.332. A template is completed and provided to all federal subrecipients at the time the subaward is issued. The agency requirements were also communicated through our Daily Digest Communication, once in 2022 and again in 2023. Additionally, the Internal Control Officer has worked with program staff to familiarize them with the requirements and process. Completion Date: December 2023 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 397421 (2023-055)

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 reporting requirements for the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action complete Co...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with reporting requirements for the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Low-Income Home Energy Assistance Program (LIHEAP) utilized a reporting process that was audited as part of the fiscal year 2023 audit. The LIHEAP program has the following process: • The program manager prepares the necessary reports. • The managing director reviews reports before submittal. • The program manager submits reports once the managing director’s approval is received. • The program manager receives notice that the report has been accepted by the grantor. • The program manager saves a copy of the report, documentation and the report submission acceptance from the grantor. To address the deficiencies reported by the auditors, program management implemented additional steps into their reporting process: • The LIHEAP program manager retains all data reports from the LIHEAP data system used for reporting. • LIHEAP information technology staff save a snapshot of the entire database from the date of the report. This allows point-in-time reporting information to be retained as audit support documentation and for audit support. • The managing director sends written/email approval to the program manager for reports reviewed. • The program manager retains written approvals as audit support documentation and for audit support. Following the auditors’ recommendations, the LIHEAP program submitted updated Grantee Survey and Household Reports, which were accepted by the grantor’s awarding portal. The conditions noted in this finding were previously reported in findings 2022-039 and 2021-032. Completion Date: March 2024 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 397417 (2023-054)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with federal requirements to perform fiscal and program monitoring of subrecipients for the Refugee and Entrant Assistance programs. Questioned Costs: Assistance Listing # 93...

Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with federal requirements to perform fiscal and program monitoring of subrecipients for the Refugee and Entrant Assistance programs. Questioned Costs: Assistance Listing # 93.566 Amount $0 Status: Corrective action in progress Corrective Action: The Department concurs with the finding. In response to a prior audit finding, the Department’s Office of Refugee and Immigrant Assistance (ORIA) developed a subrecipient versus contractor determination tool. However, this tool was not formalized until April 2023, and implementation and training occurred in April through June 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. 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

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Finding 397416 (2023-053)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Eligibility

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 concurs with the finding. By September 2024, the Department’s Office of Refugee and Immigrant Assistance (ORIA) will follow up with the remaining 35 subrecipients and require the completion of the Subrecipient Federal Financial Assistance form for fiscal year 2023, as needed. By November 2024, ORIA will: • Follow up with the remaining 35 subrecipients to verify that they completed a single audit if they received $750,000 or more in federal assistance. • Inform any subrecipients that have not been audited about the single audit requirement. • Work with Economic Services Administration (ESA) accounting staff to review all completed audit reports and, for any findings found, issue a management decision on the effectiveness of the subrecipients’ proposed corrective actions to address the findings. • Work with ESA accounting unit to establish and implement effective internal controls and written procedures to: o Identify subrecipients who receive $750,000 or more annually in federal assistance from all sources. o Verify if subrecipients complete required audits, if applicable, and take appropriate action if audits are not completed. o Review single and program-specific audit reports for findings. o Write and issue a management decision, when appropriate, within six months outlining the Department’s determination of the adequacy of the subrecipient’s proposed corrective actions to address the finding. o Monitor the subrecipient’s corrective action plan for timely and effective completion. By December 2024, ESA accounting staff will track and monitor subrecipient activities to ensure appropriate and timely corrective action is taken to resolve single and programmatic audit findings. By March 2025, ORIA and ESA accounting unit will train all program staff responsible for monitoring the new procedures to ensure a full understanding of the shared responsibilities for compliance with department policies. Completion Date: Estimated March 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 397415 (2023-052)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Department of Social and Health Services 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 for the Refugee and Entrant Assistance program. Questioned Costs:...

Finding: The Department of Social and Health Services 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 for the Refugee and Entrant Assistance program. Questioned Costs: Assistance Listing # 93.566 Amount $0 Status: Corrective action in progress Corrective Action: The Department concurs with the auditor’s findings. The Department will immediately report all first tier subawards, including amendments, totaling $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). By June 2024, to ensure ongoing compliance with the FFATA reporting requirements, the Department will: • Establish effective internal controls and written procedures to ensure: o All first-tier subawards of $30,000 or more are reported. o Grant amendments for initial awards that are below $30,000 are tracked as soon as the modifications trigger reporting requirements. o Reports for submission contain the required data elements. • Implement and communicate the procedures for reporting first tier subawards to the Division of Finance and Financial Resources (DFFR) for inputting into FSRS. • Develop written procedures for inputting subawards appropriately in FSRS and will communicate those procedures to DFFR staff. By July 2024, the Department will: • Compile the required data elements for the 29 first tier subawards and the 18 subaward amendments, in addition to any new subawards in fiscal year 2024 that meet the reporting threshold, and report to DFFR for input into FSRS. • Work with DFFR to develop and subsequently implement a process to verify all subawards and subaward amendments have been reported in FSRS. Completion Date: Estimated July 2024 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 397413 (2023-051)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Questioned Costs Matching / Level of Effort / Earmarking Subrecipient Monitoring § 200.303 § 200.403 § 200.410 § 200.53

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 $107,338,725 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 Department does not currently have the staff 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 State Auditor’s Office. In response to the auditor’s recommendations, the Department submitted a budget request for the 2024 supplemental budget. Funding was provided to develop and maintain the business process that would allow adjustments to include child-level data beginning July 2024. The conditions noted in this finding were previously reported in findings 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 306534 Questioned Costs: $1

Finding 397407 (2023-050)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles Procurement, Suspension & Debarment § 200.332

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

Finding: The Department of Health did not have adequate internal controls over and did not comply with fiscal monitoring 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 not taken Corrective Action: The Department has implemented corrective actions to address the prior year’s finding and does not concur with this finding. The State Auditor’s Office (SAO) did not report on the subrecipient review process in its entirety. The Department’s Fiscal Monitoring Unit (FMU) is not an audit department and functions differently than what SAO recommended in the finding. Federal guidance does not require a certain percentage of samples to be selected to ensure adequate review. The Department’s subrecipient monitoring process is comprehensive and involves the steps outlined below: • Complete initial risk assessment of subrecipients post contract execution to determine the level of support required from each entity as backup documentation for payment requests. • Program contract managers review supporting documentation prior to payment. • FMU conducts subrecipient monitoring visits to ensure each entity has adequate internal controls to comply with federal requirements. This includes: o Reviewing at least three months of invoices submitted by subrecipients and judgmentally selecting transactions based on subject matter expertise about DOH, specific programs, and federal guidance. The review includes ensuring adequate supporting documentation is maintained for invoiced amounts, such as timesheets and receipts. o Reviewing entity policies, procedures, and history of compliance. o Assessing manual and automated internal controls, and applicable cost allocation methodology. o Reviewing applicable contracts. Each entity has a consistent internal control structure across all funding types. As such, FMU performs subrecipient monitoring site reviews of the entity, not for a specific grant. The reviewers are required to document all grants received by the entity and select a few transactions from each, if applicable. FMU typically selects to review a quarter of the invoiced amounts. If a grant award is not represented in the invoices selected, FMU will select additional invoices to ensure all awards are included. Similar 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

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Finding 397406 (2023-049)

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 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 will review internal controls to ensure: • Timely review of federal subrecipient single audits. • Management decision letters are issued to subrecipients. • Subrecipients take timely and appropriate action on all deficiencies pertaining to the federal award. Management will monitor the control activities to ensure future compliance with the requirements. Completion Date: Estimated December 2024 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 397405 (2023-048)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Equipment & Real Property Management Internal Control / Segregation of Duties

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

Finding: The Department of Health did not have adequate internal controls over and did not comply with reporting requirements for the Epidemiology and Laboratory Capacity for Infectious Diseases program. Questioned Costs: Assistance Listing # 93.323 93.323 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: In response to the fiscal year 2022 audit recommendations, the Department implemented procedures to ensure management review and approval of the fiscal report, Case Investigation and Contact Tracing (CICT) report, and the Reopening Schools testing report are documented and retained before submission to the federal grantor. At the beginning of fiscal year 2023, the auditors were still conducting field work for the prior year’s audit. Procedures were not in place at that time when reports were submitted to the Case Risk and Exposure Surveillance Tool and RedCap systems. As a result, corrective actions were not fully implemented during the current audit year. The CICT reporting was discontinued as of August 2023, and the Reopening Schools project ended after July 31, 2023. The conditions noted in this finding were previously reported in finding 2022-034. Completion Date: January 2023 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 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

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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

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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

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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

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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

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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

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Corrective Action Plans

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