Corrective Action Plans

Finding 1200665 (2025-008)

Material Weakness 2025

Cabell Huntington Coalition for the Homeless, Inc.

WV

Subrecipient Monitoring Reporting

FFATA Reporting Management agrees with the finding. While the primary awardee (CHCH) was reprted, two subrecipients were not. As this was the first year of the grant and assistance was sought during application, management was unaware of the requirement. This requirement has now been noted and will ...

FFATA Reporting Management agrees with the finding. While the primary awardee (CHCH) was reprted, two subrecipients were not. As this was the first year of the grant and assistance was sought during application, management was unaware of the requirement. This requirement has now been noted and will be followed going forward.

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Finding 1200663 (2025-007)

Material Weakness 2025

Cabell Huntington Coalition for the Homeless, Inc.

WV

Subrecipient Monitoring

Subrecipient Monitoring Management agrees with the finding. In year one of the audited grant, subrecipients lacked adequate documentation and proper budget application. Monitoring has since increased in years two and three, with documentation reviewed prior to drawdown and payment. We also use Excel...

Subrecipient Monitoring Management agrees with the finding. In year one of the audited grant, subrecipients lacked adequate documentation and proper budget application. Monitoring has since increased in years two and three, with documentation reviewed prior to drawdown and payment. We also use Excel to track subrecipient line items to ensure costs remain eligible and within budget.

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Finding 1200661 (2025-006)

Material Weakness 2025

Cabell Huntington Coalition for the Homeless, Inc.

WV

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring

Allowable Costs/Cost Principles Management agrees with the finding. One subrecipient billed expenses which were unallowable based on budget narrative line-item amounts. Management now closely reviews subrecipient invoices to ensure proper documentation and alignment with approved budget balances.

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Finding 1200650 (2025-049)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

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

Finding Number: 2025-049 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with Recovery Audit Contractor requirements for the Medicaid program. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Car...

Finding Number: 2025-049 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with Recovery Audit Contractor requirements for the Medicaid program. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Medicaid Recovery Audit Contractors (RACs) Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Authority partially concurs with the finding. The Authority concurs it did not have a Recovery Audit Contractor (RAC) contract in place during fiscal year 2025 but does not concur with the auditor’s recommendation. The Authority signed a contract with its vendor on September 30, 2025. The work of the RAC contractor is one of many tools used by the Authority to identify and report fraud, waste, and abuse. The Authority has policies and procedures in place for claim reviews and recoveries, fraud referrals, and compliance with the Centers for Medicare and Medicaid Services reporting requirements. The work of the RAC contractor is intended to supplement the Authority’s Program Integrity work and will be incorporated into its current workflows. Prior Findings: None Completion Date: September 2025 Agency Contact: Kari Summerour, CPA External Audit Compliance Manager (360) 725-9586 Kari.Summerour@hca.wa.gov

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Finding 1200649 (2025-048)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Special Tests & Provisions Material Weakness

Finding Number: 2025-048 Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with requirements to ensure it referred all credible allegations of provider fraud to the state’s Medicaid Fraud Control Unit. Program: 93.775 – State Medica...

Finding Number: 2025-048 Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with requirements to ensure it referred all credible allegations of provider fraud to the state’s Medicaid Fraud Control Unit. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Medicaid Fraud Control Unit Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Department concurs with the finding. The Department completed corrective actions in April 2025 for the prior year’s audit finding by implementing enhanced internal controls to ensure that all fraud referrals, regardless of dollar amount, are submitted to the Medicaid Fraud Control Unit (MFCU). The audit identified 17 credible allegations within the Aging and Long-Term Support Administration and two within the Developmental Disabilities Administration. These credible allegations occurred prior to April 2025, preceding both the process improvements and the completion of the fiscal year 2024 corrective action plan. All 19 credible allegations were under $1,000 and while those may not have been referred to MFCU, the Department’s contractor, Consumer Direct Care Network Washington, did provide provider education and ensured all funds were returned to the Centers for Medicare and Medicaid Services. Prior Findings: The conditions noted in this finding were previously reported in finding 2024-077. Completion Date: April 2025 Agency Contact: Richard Meyer External Audit Compliance Manager Richard.Meyer@dsha.wa.gov

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Finding 1200648 (2025-047)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

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

Finding Number: 2025-047 Finding: The Department of Social and Health Services, Home and Community Living Administration, did not have adequate internal controls over and did not comply with survey requirements for Medicaid intermediate care facilities. Program: 93.775 – State Medicaid Fraud Control...

Finding Number: 2025-047 Finding: The Department of Social and Health Services, Home and Community Living Administration, did not have adequate internal controls over and did not comply with survey requirements for Medicaid intermediate care facilities. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Provider Health and Safety Standards Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department partially concurs with the finding. The Department was not able to meet the Intermediate Care Facilities for Individuals with Intellectual Disabilities (ICF-IID) survey requirements due to a backlog from prior years, not because of lack of internal controls. It was through applied internal controls that we identified concerns and were able to allocate resources to address the most serious concerns. The Department has made efforts since fiscal year 2023 to address the backlog of complaints and recertification surveys, but resources had to be prioritized to handle new complaints. There is only one team that manages surveys, complaints, and revisits for the entire state. To optimize the use of resources, the Field Manager meets with the Administrative Assistant on a quarterly basis to review the 365-day average report and determine if survey schedules need to be modified to meet federal requirements. To continue to address this audit issue, Regional Administrators have met with their ICF-IID teams to review survey scheduling for the year to ensure teams will be able to meet targeted survey completion dates and the required recertification timeframes. As of November 2025, the Department met compliance with the 15.9-month recertification survey interval measure based on the 2025 CMS State Performance Measurement Report. By August 2026, the Department expects to meet compliance with the 12.9-month statewide average. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-078, 2023-078, 2020-053, 2019-061, 2018–052, 2017-042, 2016-037, 2015-045, and 2014-046. Completion Date: Estimated August 2026 Agency Contact: Richard Meyer External Compliance Audit Manager Richard.Meyer@dshs.wa.gov

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Finding 1200647 (2025-046)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles HUD Housing Programs

Finding Number: 2025-046 Finding: The Department of Social and Health Services, Home and Community Living Administration, did not have adequate internal controls over and did not comply with survey requirements for Medicaid nursing homes. Program: 93.775 – State Medicaid Fraud Control Units 93.777 –...

Finding Number: 2025-046 Finding: The Department of Social and Health Services, Home and Community Living Administration, did not have adequate internal controls over and did not comply with survey requirements for Medicaid nursing homes. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Provider Health and Safety Standards Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department partially concurs with the finding. The Department was not able to meet the Nursing Home survey requirements due to a backlog from prior years, not because of lack of internal controls. It was through applied internal controls that we identified concerns and were able to allocate resources to address the most serious concerns. The Department has made efforts since fiscal year 2023 to address the backlog of complaints and recertification surveys, but resources had to be prioritized to handle new complaints. There is only one team that manages surveys, complaints, and revisits for the entire state. To optimize the use of resources, the Field Manager meets with the Administrative Assistant on a quarterly basis to review the 365-day average report and determine if survey schedules need to be modified to meet federal requirements. To continue to address this audit issue, Regional Administrators have met with their Nursing Home teams to review survey scheduling for the year to ensure teams will be able to meet targeted survey completion dates and the required recertification timeframes. As of November 2025, the Department met compliance with the 15.9-month recertification survey interval measure based on the 2025 CMS State Performance Measurement Report. By August 2026, the Department expects to meet compliance with the 12.9-month statewide average. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-079, 2023-079, and 2020-054. Completion Date: Estimated August 2026 Agency Contact: Richard Meyer External Audit Compliance Manager Richard.Meyer@dshs.wa.gov

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Finding 1200646 (2025-045)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Procurement, Suspension & Debarment Subrecipient Monitoring Special Tests & Provisions

Finding Number: 2025-045 Finding: The Department of Health did not have adequate internal controls to ensure it complied with transplant hospital survey statement of deficiencies and plan of corrections timelines. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certifi...

Finding Number: 2025-045 Finding: The Department of Health did not have adequate internal controls to ensure it complied with transplant hospital survey statement of deficiencies and plan of corrections timelines. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Provider Health and Safety Standards Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Department has implemented adequate internal controls to ensure compliance with federal requirements. Prior to the commencement of audit work in May 2025, the Department had already developed and implemented a management tracker that actively monitors transplant hospitals’ Statement of Deficiency issuance and Plan of Correction due dates. Compliance with federal requirements resulting from the strengthened internal controls will be evident in future audit cycles. Prior Findings: None Completion Date: May 2025 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1200645 (2025-044)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

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

Finding Number: 2025-044 Finding: The Department of Health did not have adequate internal controls over and did not comply with requirements to ensure timely review of hospital complaints. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Pro...

Finding Number: 2025-044 Finding: The Department of Health did not have adequate internal controls over and did not comply with requirements to ensure timely review of hospital complaints. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Provider Health and Safety Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Department has implemented adequate internal controls for timely review of hospital complaints and has developed performance measures which are actively monitored monthly to assess compliance with federal requirements. The Department has taken the following actions: • In July 2024, modified and redesigned the enforcement database to capture the two-day review entries. • In August 2024, instituted a new process to include a date stamping method and allow data entry to capture the “received” and “reviewed” dates in the database. • In September 2024, developed a report to show the two-day review dates and started monitoring the requirement in January 2025 as part of the office performance measures. • In October 2025, transferred the Complaint Intake Unit from the Office of Investigative and Legal Services to be placed directly under the Office of Health Systems Oversight. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-076 and 2023-076. Completion Date: October 2025 Agency Contact: Jeff Arbuckle External Audit Manager (360) 701-0798 Jeff.Arbuckle@doh.wa.gov

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Finding 1200644 (2025-043)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Special Tests & Provisions

Finding Number: 2025-043 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure it periodically audited financial and statistical records for inpatient hospital services. Program: 93.775 – State Medicaid Fraud Control Units 93.7...

Finding Number: 2025-043 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure it periodically audited financial and statistical records for inpatient hospital services. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions – Inpatient Hospital and Long-Term Care Facility Audits Questioned Costs: $0 Status: Corrective action not taken Corrective Action: The Authority does not concur with the finding and will continue to consult with the Centers for Medicare & Medicaid Services (CMS). The Authority maintains its internal controls are effective and policies and procedures are compliant with federal requirements. Over the past four years, the Authority took corrective action on the prior audit findings including: · Consulted with CMS for direction. · Worked with CMS to revise the State Plan. · Updated Washington Administrative Code and the Revised Code of Washington to align with federal regulations. · Updated procedures for both the Hospital Rates and Program Integrity sections. CMS provided the Authority with technical guidance on two occasions, indicating it defers to the states on how these audits are defined. The Authority believes it has addressed the deficiencies identified in previous audits through the steps listed above and no additional corrective action will be taken. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-080, 2023-081, 2022-060, 2021-051, and 2020-049. Completion Date: Not applicable Agency Contact: Kari Summerour, CPA External Audit Compliance Manager (360) 725-9586 Kari.Summerour@hca.wa.gov

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Finding 1200643 (2025-042)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Special Tests & Provisions

Finding Number: 2025-042 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure it performed procedures to safeguard against unnecessary utilization of care and services for the Medicaid program. Program: 93.775 – State Medicaid...

Finding Number: 2025-042 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with requirements to ensure it performed procedures to safeguard against unnecessary utilization of care and services for the Medicaid program. Program: 93.775 – State Medicaid Fraud Control Units 93.777 – State Survey and Certification of Health Care Providers and Suppliers 93.778 – Grants to States for Medicaid 93.778 – COVID-19 Grants to States for Medicaid Compliance Requirement: Special Tests and Provisions - Utilization Control Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Authority concurs with the finding and is committed to resolving the issues identified during the audit. The Authority is assessing its statewide surveillance and utilization control program. The results of this analysis will be used to determine any additional work or staffing required to fully comply with standards and align existing statewide workflows within the program. The analysis will also be used to finalize policies, procedures, and internal controls. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-081, 2023-082, 2022-061, and 2021-050. Completion Date: Estimated July 2026 Agency Contact: William Sogge, CPA External Audit Compliance Specialist (360) 725-5110 william.sogge@hca.wa.gov

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Finding 1200641 (2025-040)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Special Tests & Provisions Allowable Costs / Cost Principles

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

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

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Finding 1200640 (2025-039)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

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

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

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

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Finding 1200540 (2025-036)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Matching / Level of Effort / Earmarking Special Tests & Provisions

Finding Number: 2025-036 Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with health and safety requirements for the Child Care and Development Fund program. Program: 93.575 – Child Care and Development Block Grant 93.575 – COV...

Finding Number: 2025-036 Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with health and safety requirements for the Child Care and Development Fund program. Program: 93.575 – Child Care and Development Block Grant 93.575 – COVID-19 Child Care and Development Block Grant 93.596 – Child Care Mandatory and Matching Funds of the Child Care and Development Fund Compliance Requirement: Special Tests and Provisions – Health and Safety Requirements Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department is strongly committed to ensuring the health, safety, and well-being of all children in care. During state fiscal year 2025, the Department: • Implemented improvements to the child care portal system (WA Compass) to enhance operational efficiency and to maintain accurate information on licensed child care and license-exempt staff and providers. • Established a new pre-licensing team to create an efficient and streamlined pathway for the initial licensure process, allowing licensors to remain focused on completing all required annual inspections. • Increased recruitment of licensing staff throughout the state. • Conducted internal reviews and research of the annual inspection checklists and recheck follow-up timelines to identify future adjustments to the inspection and recheck process as needed. • Established a plan to provide staff an annual informational audit presentation to promote understanding and collaboration on compliance issues. • Implemented data-driven decisions to assist providers and their staff to meet health and safety requirements. • Initiated the collaborative compliance initiative to prioritize compliance with all health and safety requirements which includes promoting collaboration, encouraging innovation, and focusing more on human-centered technical assistance. The Department will: • Work on updating policies and procedures to streamline and simplify recheck timelines and processes for items of noncompliance, including improvements in WA Compass. • Review the monitoring visit procedures to assess what additional steps could be added for management to improve oversight of rechecks. • Explore ways to demonstrate and adequately document the routine monitoring of licensed and license-exempt providers’ health and safety requirements to support compliance with quality assurance. • Provide training to field staff by the Quality Assurance and Continuous Quality Improvement team on the audit process and audit findings issued, and to gather input from field staff on any gaps or potential barriers to the recheck process. • Work with the Information Technology team to develop a report that will capture the task lists on the dashboard to include historical data and to improve documentation of monitoring compliance with license-exempt providers. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-060, 2023-064, 2022-045, 2021-039, 2020-042, 2019-039, 2018-035, 2017-025, 2016-022, and 2015-024. Completion Date: Estimated June 2026 Agency Contact: Stefanie Niemela Audit Liaison (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 1200539 (2025-035)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

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

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

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

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Finding 1200538 (2025-034)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring

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

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

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Finding 1200537 (2025-033)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

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

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

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

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Finding 1200516 (2025-013)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding Number: 2025-013 Finding: The Employment Security Department did not have adequate controls over and did not comply with requirements to ensure it filed reports timely and accurately as required by the Federal Funding Accountability and Transparency Act for the Workforce Innovation and Oppor...

Finding Number: 2025-013 Finding: The Employment Security Department did not have adequate controls over and did not comply with requirements to ensure it filed reports timely and accurately as required by the Federal Funding Accountability and Transparency Act for the Workforce Innovation and Opportunity grant. Program: 17.258 – WIOA Adult Program 17.259 – WIOA Youth Activities 17.278 – WIOA Dislocated Worker Formula Grants Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The Department has taken corrective actions to address prior years’ findings on Federal Funding Accountability and Transparency Act (FFATA) reporting. However, fiscal year 2025 presented additional challenges with staffing shortages and changes to federal and state systems. The Department is continuing its efforts to strengthen internal controls and is implementing the following corrective actions: • Provide additional guidance and oversight to staff to verify accuracy of the reports and ensure timely submission to comply with FFATA reporting requirements. • Update subawards to ensure a unique number is assigned to each. • Fill positions in the unit and work with our federal grantor and state partners regarding training and guidance on the new systems. Prior Findings: The conditions noted in this finding were previously reported in findings 2024-010 and 2023-011. Completion Date: Estimated June 2026 Agency Contact: Joshua Summers External Audit Manager (360) 529-6718 Joshua.Summers@esd.wa.gov

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Finding 1200509 (2025-020)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Student Financial Aid Subrecipient Monitoring Reporting

Finding Number: 2025-020 Finding: The University of Washington did not have adequate internal controls to ensure it notified the Department of Education of changes in student enrollment information accurately and in a timely manner for the Federal Pell Grant and Direct Student Loan programs. Program...

Finding Number: 2025-020 Finding: The University of Washington did not have adequate internal controls to ensure it notified the Department of Education of changes in student enrollment information accurately and in a timely manner for the Federal Pell Grant and Direct Student Loan programs. Program: 84.063 – Federal Pell Grant Program 84.268 – Federal Direct Student Loans Compliance Requirement: Special Tests and Provisions – NSLDS Reporting Questioned Costs: $0 Status: Corrective action in progress Corrective Action: To address the audit recommendations, the University will take the following actions to strengthen monitoring and audit of the National Student Loan Data System (NSLDS) and university records to ensure enrollment reporting is timely, accurate, and complete. • The Office of the University Registrar (OUR) will reinforce and refine its quarterly audit and reconciliation activities to compare NSLDS enrollment information with institutional records subsequent to National Student Clearinghouse (NSC) submissions. • OUR will document and report discrepancies and follow a designated escalation path for resolution. A documented supervisory review will be established to strengthen internal controls. • OUR will document all current and new enrollment reporting processes and ensure sufficient written procedures are provided to primary and backup staff to perform the functions effectively. • OUR will review NSLDS records and enrollment data for the audit period and ensure accurate reporting of enrollment status. • The University will establish a policy and procedure for the retention of source documentation provided to NSC. Prior Findings: None Completion Date: Estimated August 2026 Agency Contact: Erick Winger Controller (206) 543-5322 erickw@uw.edu

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Finding 1200490 (2025-005)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding Number: 2025-005 Finding: The University of Washington did not have adequate internal controls over and did not comply with requirements to perform risk assessments for subrecipients of the Research and Development Cluster programs. Program: Research and Development Cluster Compliance Requir...

Finding Number: 2025-005 Finding: The University of Washington did not have adequate internal controls over and did not comply with requirements to perform risk assessments for subrecipients of the Research and Development Cluster programs. Program: Research and Development Cluster Compliance Requirement: Subrecipient Monitoring Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The University performs risk assessments for all new subrecipients, as well as subrecipients that have not received a risk assessment within the previous three years from the date when a new subaward is being drafted. The risk assessment on file is used to determine if additional monitoring is required, when appropriate. To address the audit recommendations, the University will update its subrecipient risk assessment process to include: • Updating a subrecipient’s risk assessment when significant events occur, such as a new single audit finding for a subaward from the University that could impact performance. Potential updates will be based on a review of the audit report and evaluation of any performance issues of the subrecipients in subawards with the University. • Adequately documenting all updates to risk assessment of subrecipients. • Performing and documenting a risk assessment at the time a new subaward is being drafted utilizing information in the most recent subrecipient risk assessment. Additional questions specific to the prime award and subaward project will be included to assess any impact on the subrecipient’s risk level. Prior Findings: None Completion Date: Estimated July 2026 Agency Contact: Erick Winger Controller (206) 543-5322 erickw@uw.edu

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Finding 1200489 (2025-004)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

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

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

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Finding 1200488 (2025-003)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

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

Finding Number: 2025-003 Finding: The University of Washington did not have adequate internal controls over and did not comply with equipment management requirements for the Research and Development programs. Program: Research and Development Cluster Compliance Requirement: Equipment Questioned Cost...

Finding Number: 2025-003 Finding: The University of Washington did not have adequate internal controls over and did not comply with equipment management requirements for the Research and Development programs. Program: Research and Development Cluster Compliance Requirement: Equipment Questioned Costs: $0 Status: Corrective action in progress Corrective Action: The University implemented Workday Financials in July 2023 and the Mobile Asset Scanning gap application for physical inventory in May 2025. The challenges and delays resulting from the University’s transition from legacy tools to modern technologies impacted the ability to effectively manage federal equipment in a timely manner. System capabilities are now in place to enable the University to perform inventory procedures to comply with equipment management requirements. The physical inventory currently in progress is estimated to be complete by the end of May 2026. As of February 2026, the University completed follow-up work on the missing asset identified during the audit and took appropriate action in accordance with state laws. Prior Findings: None Completion Date: Estimated May 2026 Agency Contact: Erick Winger Controller (206) 543-5322 erickw@uw.edu

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Finding 1200133 (2025-010)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring

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

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

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Finding 1191994 (2025-052)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Reporting Matching / Level of Effort / Earmarking

Finding Number: 2025-052 Finding: The Military Department 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 Fire Management Assistance Grant program. Program: 97.046...

Finding Number: 2025-052 Finding: The Military Department 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 Fire Management Assistance Grant program. Program: 97.046 – Fire Management Assistance Grant Compliance Requirement: Reporting Questioned Costs: $0 Status: Corrective action in progress Corrective Action: During the audit period, the Department experienced changes in data collection and reporting processes, increased workload demands, decentralization of staff, and employee turnover. As a result, data entry errors in the Federal Funding Accountability and Transparency Act (FFATA) reporting were more prevalent. The Department is implementing the following corrective actions: • Review and reinforce internal written procedures with grant management staff and leadership to ensure clarity of roles and reporting requirements. • Update the internal FFATA procedures to ensure all sub-awards and amendments are properly identified and reported. • Implement a supervisory review process requiring program staff to validate the accuracy and completeness of FFATA reports prior to submission deadlines. The Department is committed to strengthening internal controls and ensuring full compliance with FFATA reporting requirements. Management will continue to monitor reporting processes to ensure future submissions are accurate, complete, and timely. Prior Findings: None Completion Date: Estimated June 2026 Agency Contact: Melanie Rogers Deputy Finance Director (253) 512-7365 melanie.rogers@mil.wa.gov

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Finding 1191993 (2025-051)

Material Weakness 2025

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding Number: 2025-051 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with federal level of effort requirements for the Block Grants for Substance Use Prevention, Treatment, and Recovery Services program. Program: 93.959 – Block Grants for Preven...

Finding Number: 2025-051 Finding: The Health Care Authority did not have adequate internal controls over and did not comply with federal level of effort requirements for the Block Grants for Substance Use Prevention, Treatment, and Recovery Services program. Program: 93.959 – Block Grants for Prevention and Treatment of Substance Abuse 93.959 – COVID-19 Block Grants for Prevention and Treatment of Substance Abuse Compliance Requirement: Level of Effort Questioned Costs: $0 Status: Corrective action complete Corrective Action: The Authority concurs it did not meet the level of effort threshold with the information it provided to the auditor during the audit. During corrective action plan development, the Authority found that the fiscal years 2023 and 2024 substance use disorder expenditures were overstated due to the timing of moving managed care expenditures between behavioral health programs. This directly impacted and overstated the level of effort threshold for fiscal year 2025. In January 2026, the Authority submitted a request to the Substance Abuse and Mental Health Services Administration to restate and update the level of effort table. The accurately stated expenditures of prior years will allow the Authority to demonstrate that it met the threshold for fiscal year 2025. The Authority has already implemented procedures to ensure timely processing of expenditure adjustments between behavioral health programs. As of March 2026, the Authority strengthened its internal controls by: • Updating procedures aimed at identifying areas of underspend through analysis of yearly expenditure trends. • Documenting deadlines to ensure adequate time is allowed for timely waiver submission, should that be required. Prior Findings: None Completion Date: March 2026 Agency Contact: Kari Summerour, CPA External Audit Compliance Manager (360) 725-9586 Kari.Summerour@hca.wa.gov

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Corrective Action Plans

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