Finding ref number:
2023-001
Finding caption:
The City lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.
Name, address, and telephone of City contact person:
Kristy Wolf, Financial Services Manager.
420 College Street SE,
Lacey, WA 98503...
Finding ref number:
2023-001
Finding caption:
The City lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.
Name, address, and telephone of City contact person:
Kristy Wolf, Financial Services Manager.
420 College Street SE,
Lacey, WA 98503-1238
(360) 438-2668
Corrective action the auditee plans to take in response to the finding:
(If the auditee does not concur with the finding, the auditee must list the reasons for disagreement).
City of Lacey’s Response: The City of Lacey acknowledges the auditor's finding regarding the need for enhanced internal controls to verify that subrecipients are not suspended or debarred before entering into agreements involving federal funds.
The City has overall strong internal controls surrounding the utilization of grant dollars. Specific to the Congressional funds, the City had a number of mitigating controls in place to ensure the appropriate use of the funds. The City, Saint Martin’s University, and Thurston EDC are strong partners in making sure the Lacey MakerSpace reaches its full potential and continues to enhance the community. City leadership and the stated partners were thrilled to receive $1 million dollars to go towards the much-needed expansion of the Lacey MakerSpace. After receiving the award, it became clear that moving to a subrecipient model with Saint Martin’s University was the appropriate course of action. The City received approval from the Small Business Administration (granting authority) to proceed with this action. The City then drafted and executed an interlocal agreement with Saint Martin’s University. The interlocal agreement clearly stated that, as a subrecipient, Saint Martin’s University would adhere to all federal requirements. The City also completed a subrecipient risk assessment with Saint Martin’s University prior to finalizing the subrecipient model and were deemed to be a low risk subrecipient. Saint Martin’s completed a suspension and debarment check on the project’s contractor who ultimately received the funds.
The City will address its controls and oversight over grant contracts with subrecipient agreements to ensure proper adherence to suspension and debarment requirements. This will be accomplished by including a contract clause that explicitly requires all subrecipients to certify that they are not suspended, debarred, or otherwise excluded from federal programs. This clause will be applied to all relevant agreements and contracts moving forward. The City has also initiated communication with relevant City staff to ensure that they are fully aware of federal requirements regarding suspension and debarment.
The City will implement a periodic review process to ensure continued compliance with federal requirements. This includes regular audits of contracts and subawards to confirm that all necessary documentation is in place and that the City’s internal controls are functioning effectively.
The City of Lacey is committed to full compliance with all federal regulations and takes the auditor’s finding seriously. We believe that the steps we have taken and the controls we have put in place for future use will effectively address the issue and prevent further occurrences. We appreciate the auditor’s recommendations and will continue to monitor and enhance our internal controls to ensure the integrity of our operations and the proper use of federal funds.
Anticipated date to complete the corrective action: 8/16/2024