Corrective Action Plans

Finding 558729 (2024-031)

Material Weakness 2024

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 to ensure subrecipients of the Aging Cluster Programs obtained required single audits. Questioned Costs: Assistance Listing # 93.044 93.044 COVID-19 93.045 93.045 COVID-19 93.053 Amount $0 Status:...

Finding: The Department of Social and Health Services did not have adequate internal controls to ensure subrecipients of the Aging Cluster Programs obtained required single audits. Questioned Costs: Assistance Listing # 93.044 93.044 COVID-19 93.045 93.045 COVID-19 93.053 Amount $0 Status: Corrective action complete Corrective Action: The Department concurs with the finding. This is a repeat finding of the same issues reported in the previous year due to the corrective action plan not being completed until October 2024. As of September 2024, the Department implemented the following procedures: • Send reminders to all Area Agencies on Aging (AAAs) to submit their audits six months after fiscal year-end close. • Continue email reminders until single audit reports are received or once the AAA has communicated an estimated audit completion date. • Document all communication with AAAs in the federal Tracker system. As of October 2024, the Department: • Updated the single audit monitoring tracking sheet to document the dates of audit requests, receipts, date of review, confirmation of Federal Audit Clearinghouse receipt, dates of communication with AAAs including when a management letter is sent and the AAAs response. • Required the AAA & Grants Unit Manager or Office Chief to review the monitoring tracking sheet nine months after the subrecipients’ fiscal year end to ensure that all single audits are received timely. • Began performing monthly follow-up on outstanding audit reports and timing of management decision letters. The conditions noted in this finding were previously reported in finding 2023-041. Completion Date: October 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 558728 (2024-030)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Internal Control / Segregation of Duties

Finding: The Department of Social and Health Services 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 Aging Cluster Programs. Questioned Costs: Assistance Listing # 93.04...

Finding: The Department of Social and Health Services 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 Aging Cluster Programs. Questioned Costs: Assistance Listing # 93.044 93.044 COVID-19 93.045 93.045 COVID-19 93.053 Amount $0 Status: Corrective action complete Corrective Action: The Department concurs with the finding. This is a repeat finding of the same issues reported in the previous year due to the corrective action plan not being completed until July 2024. As of July 2024, the Department implemented the following procedures: • Included Initial Notices of Award (NOA), with the required 14 federal identification elements, in the initial subaward as Exhibit D in the contracts. • Added language to the subaward document informing Area Agencies on Aging (AAAs) that NOAs are posted online. • Fiscal staff to notify all AAA fiscal staff via email when new NOAs are posted. • Contracts staff to attach Exhibit D to the initial subaward before signing the contract. The conditions noted in this finding were previously reported in finding 2023-040. Completion Date: 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 558727 (2024-029)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Material Weakness Reporting

Finding: The Department of Social and Health Services did not have adequate internal controls to ensure it filed reports timely as required by the Federal Funding Accountability and Transparency Act. Questioned Costs: Assistance Listing # 93.044 93.044 COVID-19 93.045 93.045 COVID-19 93.053 ...

Finding: The Department of Social and Health Services did not have adequate internal controls to ensure it filed reports timely as required by the Federal Funding Accountability and Transparency Act. Questioned Costs: Assistance Listing # 93.044 93.044 COVID-19 93.045 93.045 COVID-19 93.053 Amount $0 Status: Corrective action complete Corrective Action: The Department concurs with the finding. As of January 2024, the Department: • Created a subawards and amendments tracking spreadsheet with the required fields and contract information for reports required by the Federal Funding Accountability and Transparency Act (FFATA). • Assigned two fiscal staff to ensure FFATA reporting activities are submitted in the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS). As of February 2024, the Department: • Ensured federal fiscal year 2024 funded contracts that were executed in December 2023 for the Office of Aging were entered in FSRS. • Added procedures for the Office Chief or designee to review the subawards and amendments tracking spreadsheet monthly for FFATA reporting to ensure federal deadlines are met consistently. As of March 2024, the Department collaborated with the Administration of Community Living and developed a plan to address the FFATA reporting backlog in state fiscal years 2022 and 2023 and ensured all FFATA reports were entered in FSRS for all previous years. The conditions noted in this finding were previously reported in finding 2023-039. Completion Date: March 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 558720 (2024-025)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls to ensure it performed risk assessments for subrecipients of the Special Education program. Questioned Costs: Assistance Listing # 84.027 84.027 COVID-19 84.173 84.173 COVID-19 Status: Correc...

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls to ensure it performed risk assessments for subrecipients of the Special Education program. Questioned Costs: Assistance Listing # 84.027 84.027 COVID-19 84.173 84.173 COVID-19 Status: Corrective action complete Corrective Action: The Office of Superintendent of Public Instruction concurs with this finding. As of April 2024, the Special Education Division fully implemented the corrective action plan which was developed to address prior years’ findings. This included conducting fiscal monitoring annually and issuing a final report to all nine Educational Service Districts (ESDs) statewide. Based on the results from monitoring activities over year-end reporting, ESDs will be selected for additional monitoring and may be subject to a future onsite visit if deemed necessary. The conditions noted in this finding were previously reported in findings 2023-036, 2022-026, and 2021-023. Completion Date: April 2024 Agency Contact: Tania May Assistant Superintendent, Special Education PO Box 47200 Olympia, WA 98504-7200 (360) 725-6075 Tania.may@k12.wa.us

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Finding 558712 (2024-010)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Employment Security 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 Workforce Innovation and Opportunity grant. Questioned Costs: Assis...

Finding: The Employment Security 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 Workforce Innovation and Opportunity grant. Questioned Costs: Assistance Listing # 17.258 17.259 17.278 Amount $0 Status: Corrective action complete Corrective Action: The Department has implemented procedures to ensure the Federal Funding Accountability and Transparency Act (FFATA) reports are completed timely, and documentation of the review and submission to the federal agency is maintained. The Department: • Updated the process to require review and approval of the FFATA input sheet and required data elements prior to entry into the FFATA Subaward Reporting System (FSRS). After the report is submitted, it is reviewed, and supporting documentation is saved. • Expanded training on the federal FFATA requirements and system to additional staff within the Grants Management Unit to ensure adequate coverage. The FSRS is currently being phased out and reporting will be transitioned to SAM.gov after March 2025. The Department will update procedures and provide staff training once the federal government confirms the effective date of the transition. The conditions noted in this finding were previously reported in finding 2023-011. Completion Date: December 2024 Agency Contact: Jay Summers External Audit Manager PO Box 9046 Olympia, WA 98507-9046 (360) 529-6718 Joshua.Summers@esd.wa.gov

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Finding 558711 (2024-085)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Military Department did not have adequate internal controls to ensure it accurately filed reports required by the Federal Funding Accountability and Transparency Act for the Disaster Grants Public Assistance program. Questioned Costs: Assistance Listing # 97.036 Amount $0 Stat...

Finding: The Military Department did not have adequate internal controls to ensure it accurately filed reports required by the Federal Funding Accountability and Transparency Act for the Disaster Grants Public Assistance program. Questioned Costs: Assistance Listing # 97.036 Amount $0 Status: Corrective action complete Corrective Action: The Military Department concurs with the finding. During this audit period, the Department experienced changes in data collection/reporting processes, increased workload, decentralization of employees, and employee turnover. As a result, data entry errors in the Federal Funding Accountability and Transparency Act (FFATA) reporting were more prevalent. As of January 2025, the Department implemented the following corrective actions: • The grant management team and contracts office reviewed and validated internal written procedures. • Updated the FFATA reporting procedures to ensure that amendments or sub-awards that bring an award over the $30,000 threshold are accounted for. • The grant program staff added an internal control step in which the supervisor will review and confirm the accuracy of the FFATA data before it is submitted to the contracts office to be entered into the FFATA reporting system. The Department is committed to strengthening internal controls and complying with FFATA reporting requirements. Management will continue to monitor the process to ensure future reports are submitted accurately and completely. The corrective actions were fully implemented as of the February 2025 reporting period. Completion Date: February 2025 Agency Contact: Seth Nickerson Deputy Chief Financial Officer Building 1 1 Militia Drive Camp Murray, WA 98430-5000 (253) 310-1783 seth.nickerson@mil.wa.gov

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Finding 558698 (2024-084)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

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

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

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Finding 558697 (2024-083)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Reporting

Finding: The Health Care Authority 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 Block Grants for Substance Use Prevention, Treatment, and R...

Finding: The Health Care Authority 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 Block Grants for Substance Use Prevention, Treatment, and Recovery Services. Questioned Costs: Assistance Listing # 93.959 93.959 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Authority implemented a new process to identify and report contracts required to be reported by the Federal Funding Accountability and Transparency Act in early fiscal year 2024. A reconciliation process to ensure all reports are filed as required was then developed and implemented in April 2024. After implementation, several inconsistencies were identified and resolved in June and July 2024. Updated training was provided to staff involved in the process to resolve the identified issues. The conditions noted in this finding were previously reported in findings 2023-086, 2022-069, and 2021-058. Completion Date: July 2024 Agency Contact: William Sogge, CPA, CIA External Audit Compliance Specialist PO Box 42724 Olympia, WA 98504-2691 (360) 725-5110 william.sogge@hca.wa.gov

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Finding 558696 (2024-082)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Reporting Subrecipient Monitoring

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

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

View Audit 355165 Questioned Costs: $1

Finding 558689 (2024-075)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Procurement, Suspension & Debarment Subrecipient Monitoring

Finding: The Health Care Authority did not have adequate internal controls over and did not comply with federal provider eligibility requirements for the Medicaid and Children’s Health Insurance Program. Questioned Costs: Assistance Listing # 93.767 93.767 COVID-19 93.775 93.777 93.777 COVID...

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

View Audit 355165 Questioned Costs: $1

Finding 558688 (2024-074)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

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

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

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

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Finding 558685 (2024-073)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Matching / Level of Effort / Earmarking Subrecipient Monitoring Reporting

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with reporting requirements to ensure reports were complete and accurate for the Social Services Block Grant program. Questioned Costs: Assistance Listing # 93.667 Status...

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with reporting requirements to ensure reports were complete and accurate for the Social Services Block Grant program. Questioned Costs: Assistance Listing # 93.667 Status: Corrective action in progress Corrective Action: Completion Date: The Department maintains that funds were not improperly charged or reported for the Social Services Block Grant (SSBG) program. The Department provided the State Auditor’s Office (SAO) with detailed expenditure data reports, email documentation showing management’s review of the expenditures being charged to the SSBG program and changes being requested prior to federal submission. In addition, the federal reporting system creates an email after certification, which the Department shared with the SAO. The Department implemented grant-level management of all federal funds, including the SSBG program. This process consists of making grant-level adjustments between allowable grant sources to properly spend grant funds within the allowable period of performance and ensure level of effort and matching requirements are met. The Department allocated the SSBG funds to eligible clients and allowable activities in compliance with 45 CFR 98.67 but did not include the level of data recommended by the SAO for some transfers. In response to the auditor’s recommendations, the Department submitted a budget request for the 2024 supplemental budget. The enacted budget included funding to implement the Department’s budget request beginning July 1, 2024. The Department is working with a developer to assist with building out the required databases between the Social Service Payment System and the Agency Financial Reporting System to allow transfers between funding sources to include transaction level data related to the expenditures. The Department is committed to collaborating with SAO to determine an appropriate methodology which identifies a sampling unit that can be used to accurately test compliance. The Department looks forward to working with SAO to resolve the data concerns in the audit of the SSBG program. The conditions noted in this finding were previously reported in finding 2023-072. Estimated December 2025 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 558684 (2024-072)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Period of Performance Subrecipient Monitoring

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure payments to providers were allowable and properly supported for the Social Services Block Grant. Questioned Costs: Assistance Listing # 93.667 ...

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

View Audit 355165 Questioned Costs: $1

Finding 558665 (2024-071)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

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

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure Foster Care Maintenance payment rates were properly calculated. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Status: Corrective ...

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure Foster Care Maintenance payment rates were properly calculated. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Status: Corrective action in progress Corrective Action: The Department concurs that policies and procedures related to rate setting for Foster Care maintenance payments are not currently established and is committed to strengthening internal controls and complying with federal requirements. In February 2025, the Department met with the State Auditor’s Office to gather an understanding of concerns and discuss how reasonable and allowable rates could be documented to ensure federal compliance. The Department will prioritize establishing written policies and procedures for setting payment rates to ensure maintenance payment rates only include allowable costs. Completion Date: Estimated July 2026 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 558664 (2024-070)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Reporting Subrecipient Monitoring Material Weakness

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

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with reporting requirements for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Status: Corrective action complete Corrective Action: The Department is committed to strengthening internal controls and complying with grant requirements. As stated in the finding’s Cause of Condition, the Department did not follow the U.S. Department of Health and Human Services’ (HHS) published instructions. To address the auditor’s specific recommendations, the Department has: • Reviewed and updated all electronic versions of the quarterly crosswalks to align with HHS instructions. • Submitted a correction to the April 2025 quarterly report. The conditions noted in this finding were previously reported in findings 2023-069 and 2022-051. Completion Date: April 2025 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

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Finding 558663 (2024-069)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Eligibility

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

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure a child is eligible and 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 Status: Corrective action complete Corrective Action: The Department is committed to strengthening internal controls and complying with grant requirements. For the specific exceptions identified in the finding, the Department has taken the following actions: Individuals: • Updated the source of funds in the FamLink application for the child identified in the audit exception to ensure future payments would be made with state funds. • Researched all payments made on behalf of the child and returned the federal portion to the grantor. • Updated the peer review process to ensure that a sample of cases are reviewed quarterly and all documentation is properly retained. Background Checks: • In January 2024, the Department increased its use of National Crime Information Center (NCIC) background checks to ensure all individuals required to complete fingerprint-based checks are compliant prior to a child’s placement. • The Department continues to use the Plan, Do, Check, Act (continuous quality improvement process) to communicate changes and provide additional training to staff as needed to ensure compliance with the background check requirement. The conditions noted in this finding were previously reported in findings 2023-068 and 2022-050. 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

View Audit 355165 Questioned Costs: $1

Finding 558662 (2024-068)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

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

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

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

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Finding 558661 (2024-067)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

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

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

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

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Finding 558660 (2024-066)

Significant Deficiency 2024

State of Washington C/o Office of Financial Management

WA

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles

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

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

View Audit 355165 Questioned Costs: $1

Finding 558652 (2024-055)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Allowable Costs / Cost Principles

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

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

View Audit 355165

Finding 558651 (2024-054)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Procurement, Suspension & Debarment

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 are clearly identified as subawards. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-...

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 are clearly identified as subawards. 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 implemented a plan to improve the documentation and communication regarding required federal award identification elements to ensure compliance with 2 CFR 200.332 Requirements for Pass-Through Entities. The plan includes the following steps: • The appropriate contract template is selected, and program staff properly identify recipient type as “contractor” or “subrecipient”. • The Federal Award Identification Number is included on each contract face sheet, information sheet, section one, and the contract special terms and conditions. • The LIHEAP Commerce Specialist enters the required information, which is reviewed and verified by the LIHEAP Program Manager and the Community and Economic Opportunities Managing Director before contract execution. The program ensures all federal requirements for pass-through entities are included in the contract or in a separate document as part of the subaward. This process has already been implemented in current contracts. The conditions noted in this finding were previously reported in finding 2023-056. Completion Date: February 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 355165

Finding 558650 (2024-053)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Reporting

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 in progress ...

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 in progress Corrective Action: The Low-Income Home Energy Assistance Program (LIHEAP) staff will work with the Financial Services Division staff to enhance and improve internal controls and ensure accurate reporting which will include the following: • Budget staff will review and approve the SF-425 federal financial reports, the Carryover and Reallotment Report, and the Grantee Survey Section 1 for completeness and accuracy prior to submission to the program for entry into the federal reporting system. • Budget and accounting staff will ensure Module 1 of the LIHEAP Performance Data Form reconciles to the amounts reported on both the Carryover and Reallotment and the SF-425 reports to prevent reporting inconsistencies. • LIHEAP Energy and Weatherization staff will coordinate activities between their programs to include: o Completing a memorandum of understanding outlining reporting requirements and timelines. o Scheduling time to attend training on reporting timelines and data accuracy requirements. o Tracking data on weatherization obligations, households served, and expenditures for required federal reporting. The Department’s information technology (IT) staff completed system updates to correct identified issues and ensure alignment with the federal reporting guidelines. IT staff will continue to monitor and refine data processes to improve accuracy and consistency. The conditions noted in this finding were previously reported in findings 2023-055, 2022-039, and 2021-032. Completion Date: Estimated August 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 355165

Finding 558649 (2024-052)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Internal Control / Segregation of Duties

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to ensure it filed reports required by the Federal Funding Accountability and Transparency Act. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Stat...

Finding: The Department of Commerce 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 # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Department is in the process of implementing procedures to strengthen internal controls and ensure compliance with the Federal Funding Accountability and Transparency Act (FFATA) reporting requirements. The Department will review and update procedures to improve data entry accuracy for FFATA reporting. Additional internal controls will be implemented to strengthen the reporting process, which will include: • Establishing a verification process for budget staff to review and approve award letters and funding allocation before issuing subawards and completing FFATA reporting. • Implementing a process to ensure each subaward and amendment is entered separately into the reporting system by the federal deadline. • Completing a secondary review by budget staff to verify financial accuracy before submission in the reporting system by the Program Manager. • Developing a standard procedure for retaining copies of completed reports. The FFATA subaward reporting has recently transitioned to SAM.gov. The Department will establish a procedural review for the account migration to ensure appropriate user access is maintained. The Department will review the FFATA procedures annually to ensure compliance with current federal requirements. Completion Date: Estimated August 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 355165

Finding 558648 (2024-051)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Internal Control / Segregation of Duties

Finding: The Department of Commerce did not have adequate internal controls over 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 Status: Corrective action in progress Corrective...

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 Status: Corrective action in progress Corrective Action: In response to the finding for the Low-Income Home Energy Assistance Program (LIHEAP), program staff, Community Economic Opportunities Unit leadership, and division budget staff collaborated to co-design and implement a robust procedure for completing future Carryover and Reallotment Reports. This new process was developed through a series of collaborative planning sessions that emphasized clarity in roles and responsibilities and a commitment to ensuring accuracy. Specific steps included: • Defining clear roles and responsibilities for each staff member involved in the preparation, review, and submission of the report. This ensures that every individual understands their tasks and deadlines, minimizing the risk of errors or delays. • Establishing a multi-step review process to validate data accuracy and ensure compliance with federal reporting requirements. This includes peer reviews before final submission. • Creating a process timeline with milestone dates for data collection, review, and submission to guarantee timely completion of the report. Integrating these measures into the program's operations allows the Department to strengthen its internal controls and ensure compliance with LIHEAP reporting requirements. The new process will enable timely, accurate, and efficient reporting, aligning with the expectations of the Department of Health and Human Services, Office of Community Services. The Department will consult with the federal grantor to determine if it should revise and resubmit the report. Completion Date: Estimated August 2025 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 355165

Finding 558647 (2024-050)

Material Weakness 2024

State of Washington C/o Office of Financial Management

WA

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

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

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

View Audit 355165 Questioned Costs: $1

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