Corrective Action Plans

Finding 397499 (2023-040)

Material Weakness 2023

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 in progress Corrective Action: The Department concurs with the finding. The Department receives Notices of Award (NOA) from the Administration of Community Living roughly three to four times per award in partial amounts. To reduce the time and effort it takes to issue subaward amendments to the 13 Area Agencies on Aging (AAA), the Department decided to post NOAs on the Department’s intranet used to communicate management bulletins and other documents to the AAAs to make the process more efficient. Unfortunately, the Department did not update subaward language to outline this change in the process. By August 2024, the Department will: • Include NOAs, with the required 14 federal identification elements, for each funding source in the initial subaward as an Exhibit D in the contracts. In addition, contract staff will ensure Exhibit D is attached to the initial subaward before the contracts are signed. • Add language to the subaward informing the AAAs that future NOAs will be posted on the Department’s intranet. Completion Date: Estimated August 2024 Agency Contact: Richard Meyer External Audit Compliance Manager PO Box 45804 Olympia, WA 98504-5804 (360) 664-6027 Richard.Meyer@dshs.wa.gov

View Audit 306534

Finding 397498 (2023-039)

Material Weakness 2023

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 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 # 93.044 93.044 COVID-19 93...

Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with requirements to ensure it filed reports required by the Federal Funding Accountability and Transparency Act. Questioned Costs: Assistance Listing # 93.044 93.044 COVID-19 93.045 93.045 COVID-19 93.053 Amount $0 Status: Corrective action in progress 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. By July 2024, the Department will collaborate with the Administration of Community Living to develop a plan to address the FFATA reporting backlog in state fiscal years 2022 and 2023, and to ensure all FFATA reports are entered in FSRS for all previous years. Completion Date: Estimated July 2024 Agency Contact: Richard Meyer External Audit Compliance Manager PO Box 45804 Olympia, WA 98504-5804 (360) 664-6027 Richard.Meyer@dshs.wa.gov

View Audit 306534

Finding 397488 (2023-036)

Significant Deficiency 2023

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 Amount $0 Sta...

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 Amount $0 Status: Corrective action complete Corrective Action: In April 2022, the Office’s Special Education division revised and expanded the form package that Educational Service Districts (ESDs) need to submit as part of year-end reporting. Additionally, ESDs are required to respond to a series of questions and provide applicable documentation for contracts and procurement, time and effort process and reports, documentation for professional development expenditures, and year-end expenditure reports. Based on the results from monitoring activities over year-end reporting, ESDs will be selected for additional monitoring and may be subject to an onsite visit if deemed necessary. In March 2023, the Office finalized the Fiscal Monitoring Procedures Handbook for ESDs. The following corrective actions have been implemented: • ESDs were required to upload documentation by February 1, 2024. • The Office completed a review of submitted documents and issued reports to ESDs as of February 29, 2024. The reports identified required or recommended corrective actions. • The Office issued final reports to ESDs within 60 calendar days after documentation was reviewed, as of April 30, 2024. The conditions noted in this finding were previously reported in findings 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

View Audit 306534

Finding 397487 (2023-035)

None 2023

State of Washington C/o Office of Financial Management

WA

Questioned Costs Allowable Costs / Cost Principles § 200.1 § 200.410

Finding: The Office of Superintendent of Public Instruction improperly charged $42,265 to the Special Education Cluster. Questioned Costs: Assistance Listing # 84.027 84.027 COVID-19 84.173 84.173 COVID-19 Amount $42,265 Status: Corrective action complete Corrective Action: As stated in...

Finding: The Office of Superintendent of Public Instruction improperly charged $42,265 to the Special Education Cluster. Questioned Costs: Assistance Listing # 84.027 84.027 COVID-19 84.173 84.173 COVID-19 Amount $42,265 Status: Corrective action complete Corrective Action: As stated in the finding, the Office has adequate internal controls to comply with period of performance requirements. To address the allowable periods for journal vouchers (corrections), the Office will ensure the correction cycle will align with federally established liquidation periods. In response to the finding, the Office has updated procedures to strengthen internal controls, as follows: • Monitor monthly expenditures to ensure the Office stays within the allowable pre-determined threshold and grant award limit. • Complete expenditure corrections within the grant liquidation period. • Liquidate obligations charged to the grant on the last business day of January (or 120 days after the budget period ends). • Request prior approval of late liquidations from the federal grantor as needed. The Office will communicate the corrective action plan with internal stakeholders to ensure compliance with updated process/procedures. The Office will consult with the federal grantor to discuss whether the questioned costs identified in the audit should be repaid. Completion Date: January 2024 Agency Contact: Amy Kollar Director of Agency Financial Services PO Box 47200 Olympia, WA 98504-7200 (360) 725-6283 Amy.kollar@k12.wa.us

View Audit 306534 Questioned Costs: $1

Finding 397486 (2023-034)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

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

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with requirements to ensure it met the earmarking requirements for the Special Education program. Questioned Costs: Assistance Listing # 84.027 84.027 COVID-19 84.173 8...

Finding: The Office of Superintendent of Public Instruction did not have adequate internal controls over and did not comply with requirements to ensure it met the earmarking requirements for the Special Education program. Questioned Costs: Assistance Listing # 84.027 84.027 COVID-19 84.173 84.173 COVID-19 Amount $378,206 Status: Corrective action complete Corrective Action: When the Special Education program underwent a fiscal leadership transition in 2021, the incoming director identified necessary changes in agency procedures for closing out fiscal year (FY) 2021. The director and budget analyst have been maintaining weekly check-ins since May 2022 to discuss the implementation of proper internal controls. Beginning in FY 2023, the Office has fully implemented processes to ensure spending plans do not exceed the maximum allowable amounts earmarked for administration and other state-level activities. The updated procedures require the director of Operations and the budget analyst to perform the following: • Review criteria for spending plans at the beginning of the fiscal year. • Review the Grant Award Notice and Grants to States Summary Table and Preschool Grants to States Summary Table. • Review spending plans and update the maximum allowable amounts earmarked for administration and other state-level activities in the spending plan throughout the fiscal year. • Meet weekly to review spending plans and update plans as requests are received. • Review monthly expenditure reports during weekly meetings. These updated procedures have contributed to increased communication and partnership between the director of Operations and the budget analyst. These internal controls provide assurance that the Office will meet earmarking requirements and compliance with federal rules. The Office will consult with the federal grantor to discuss whether the questioned costs identified in the audit should be repaid. The conditions noted in this finding were previously reported in finding 2022-025. Completion Date: March 2024 Agency Contact: Tania May Assistant Superintendent, Special Education PO Box 47200 Olympia, WA 98504-7200 (360) 725-6075 Tania.may@k12.wa.us

View Audit 306534 Questioned Costs: $1

Finding 397482 (2023-011)

Material Weakness 2023

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: • Established new credentials within the federal reporting system which will allow the Department to provide verification of the timeliness of the reports. • Updated the process to require completing and saving supporting documentation for the reports prior to entering data into the federal system separately by the Grants Manager. • Expanded training on the federal FFATA requirements and system to additional staff within the Grants Management Unit to ensure adequate coverage. Completion Date: January 2024 Agency Contact: Jay Summers External Audit Manager PO Box 9046 Olympia, WA 98507-9046 (360) 529-6718 Joshua.Summers@esd.wa.gov

View Audit 306534

Finding 397465 (2023-087)

Material Weakness 2023

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 over and did not comply with federal requirements to ensure subrecipients of the Block Grants for Prevention and Treatment of Substance Abuse program received required single audits, and that it appropriately followed up on ...

Finding: The Health Care Authority did not have adequate internal controls over and did not comply with federal requirements to ensure subrecipients of the Block Grants for Prevention and Treatment of Substance Abuse 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 in progress Corrective Action: Completion Date: Agency Contact: The Authority partially concurs with the finding. Effective July 2023, the Authority transitioned the subrecipient monitoring single audit tracking process to a new unit. The Authority will: • Implement and formalize new procedures to ensure subrecipients receive required single audits. • Follow up on findings and issue timely management decisions. The conditions noted in this finding were previously reported in finding 2022-066. Estimated June 2024 William Sogge, CPA, CIA External Audit Liaison PO Box 45502 Olympia, WA 98504-5502 (360) 725-5110 william.sogge@hca.wa.gov

View Audit 306534

Finding 397464 (2023-086)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Reporting

Finding: The 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 Prevention and Treatment of Substance Abuse. Questi...

Finding: The 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 Prevention and Treatment of Substance Abuse. Questioned Costs: Assistance Listing # 93.959 93.959 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Authority concurs with the finding. The Authority implemented the following to comply with the reporting requirements: • Office of Contracts and Procurement includes a Federal Funding Accountability and Transparency Act (FFATA) form as the last attachment in all subawards and ensures it is complete prior to forwarding it to Grants Accounting. • Grants Accounting staff were trained on an interim process to routinely monitor FFATA contracts forwarded by the Office of Contracts and Procurement and enter agency information into the FFATA Subaward Reporting System. The Authority will establish a validation process to ensure executed subawards are identified for reporting and completed reports are reviewed. The Authority will also formalize internal processes into procedures and continue to provide training to staff involved in the process. The conditions noted in this finding were previously reported in findings 2022-069 and 2021-058. Completion Date: Estimated June 2024 Agency Contact: William Sogge, CPA, CIA External Audit Liaison PO Box 45502 Olympia, WA 98504-5502 (360) 725-5110 william.sogge@hca.wa.gov

View Audit 306534

Finding 397463 (2023-085)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Internal Control / Segregation of Duties Matching / Level of Effort / Earmarking

Finding: The Health Care Authority did not have adequate internal controls over earmarking requirements for the Block Grants for Prevention and Treatment of Substance Abuse. Questioned Costs: Assistance Listing # 93.959 93.959 COVID-19 Amount $0 Status: Corrective action complete Correct...

Finding: The Health Care Authority did not have adequate internal controls over earmarking requirements for the Block Grants for Prevention and Treatment of Substance Abuse. Questioned Costs: Assistance Listing # 93.959 93.959 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: Monthly tracking workbooks are being completed and reviewed throughout the fiscal year. To address the audit recommendation, the Authority implemented formal communication for review of the monthly tracking workbooks and began maintaining documentation of the review in December 2022. The Authority is in compliance with the earmarking requirements of the program. No further procedural changes are needed. The conditions noted in this finding were previously reported in findings 2022-068 and 2021-056. Completion Date: December 2022 Agency Contact: William Sogge, CPA, CIA External Audit Liaison PO Box 45502 Olympia, WA 98504-5502 (360) 725-5110 william.sogge@hca.wa.gov

View Audit 306534

Finding 397462 (2023-084)

Material Weakness 2023

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 to ensure payments to providers for the Block Grants for Prevention and Treatment of Substance Abuse program were allowable and met period of performance requirements. Questioned Costs: Assistance Listing # 93.959 93....

Finding: The Health Care Authority did not have adequate internal controls to ensure payments to providers for the Block Grants for Prevention and Treatment of Substance Abuse program were allowable and met period of performance requirements. Questioned Costs: Assistance Listing # 93.959 93.959 COVID-19 Amount $3,447,346 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 2022-067, 2021-057, and 2020-059. Completion Date: Not applicable Agency Contact: William Sogge, CPA, CIA External Audit Liaison PO Box 45502 Olympia, WA 98504-5502 (360) 725-5110 william.sogge@hca.wa.gov

View Audit 306534 Questioned Costs: $1

Finding 397461 (2023-083)

Significant Deficiency 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Eligibility Internal Control / Segregation of Duties

Finding: The Department of Social and Health Services did not have adequate internal controls to ensure individuals are eligible to receive benefits for the Money Follows the Person program. Questioned Costs: Assistance Listing # 93.791 Amount $0 Status: Corrective action complete Correc...

Finding: The Department of Social and Health Services did not have adequate internal controls to ensure individuals are eligible to receive benefits for the Money Follows the Person program. Questioned Costs: Assistance Listing # 93.791 Amount $0 Status: Corrective action complete Corrective Action: The Department partially agrees with the finding. The Department agrees that the Financial and Social Services Communication (14-443) forms were not provided to terminate the enrollment of the four exceptions identified in the finding. However, in those exceptions, the Roads to Community Living (RCL) disenrollment communication was made in accordance with the existing Nursing Facility Case Management policy as defined in Chapter 10 of the Long-Term Care (LTC) Manual. In addition, all clients met eligibility criteria for RCL services or were converted to another Home and Community Based program within the 365-day RCL demonstration year limitation. In these cases, the client was converted to a state plan or waiver with the new program start date noted on the 14-443 forms. The 14-443 form is a communication tool used by the Department’s public benefit specialists. For Modified Adjusted Gross Income (MAGI) enrolled Medicaid participants, benefits are managed by the Washington State Health Care Authority and the 14-443 form is not required or used by the Department’s public benefit specialists. This MAGI beneficiary communication detail was not articulated in the RCL chapter of the LTC Manual. As of May 2024, the Department updated Chapter 29 of the LTC Manual to clarify instructions related to when the 14-443 form must be completed for MAGI participants and what needs to be included on the form when it is required. Completion Date: May 2024 Agency Contact: Richard Meyer External Audit Compliance Manager PO Box 45804 Olympia, WA 98504-5804 (360) 664-6027 Richard.Meyer@dshs.wa.gov

View Audit 306534

Finding 397454 (2023-074)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

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

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 93.775 93.777 93.777 COVID 93...

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 93.775 93.777 93.777 COVID 93.778 93.778 COVID Amount $0 Status: Corrective action in progress Corrective Action: The Authority partially concurs with the finding. The Authority does not concur that four providers did not receive a proper license check, nor that the backdated provider was noncompliant with regulations prior to receiving a National Provider Identifier (NPI). When a provider’s license expires, the Authority enters an end date for the provider taxonomy to prevent future payments. The Authority does not pay claims without an NPI and this is compliant with federal requirements. Corrective action has been in process to address revalidation issues. 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 developing additional procedures to strengthen internal controls over provider enrollment. The conditions noted in this finding were previously reported in findings 2022-055, 2021-047, 2020-046, 2019-048, 2018-042, 2017-033, and 2016-035. Completion Date: Estimated December 2024 Agency Contact: William Sogge, CPA, CIA External Audit Liaison PO Box 45502 Olympia, WA 98504-5502 (360) 725-5110 william.sogge@hca.wa.gov

View Audit 306534

Finding 397453 (2023-073)

Material Weakness 2023

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 Amount $0 Status: Corrective...

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 Amount $0 Status: Corrective action in progress Corrective Action: Completion Date: The Authority partially concurs with the finding. Audited financial reports: The Authority agrees it allowed Managed Care Organizations (MCO) to submit annual audited financial reports in accordance with Statutory Accounting Principles to be consistent with the standards used by the Washington State Office of the Insurance Commissioner. The Authority will amend contract language to require MCOs to submit audited financial reports prepared in accordance with Generally Accepted Accounting Principles and Generally Accepted Auditing Standards, in order to comply with federal requirements. The Managed Care Oversight Audit Plan details the scheduled audits and prioritizes the various required audits. Going forward, the audit plan will list more specific information regarding the requirements and these changes will be added to the strategic plan. Periodic audits: The Authority does not concur with the auditor’s opinion that periodic audits must be “conducted and fully complete” at least once every three years. The federal regulations found in 42 CFR §438.602 specifically states: “The State must periodically, but no less frequently than once every 3 years, conduct, or contract for the conduct of, an independent audit…”. The term “complete” is not included in the federal regulations. The Authority will reach out to the Centers for Medicare & Medicaid Services to confirm its interpretation of the regulation. The conditions noted in this finding were previously reported in findings 2022-054 and 2021-048. Estimated July 2024 Agency Contact: Kari Summerour, CPA External Audit Compliance Manager PO Box 45502 Olympia, WA 98504-5502 (360) 725-9586 Kari.Summerour@hca.wa.gov

View Audit 306534

Finding 397449 (2023-072)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Reporting Matching / Level of Effort / Earmarking Subrecipient Monitoring

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 Amount ...

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 Amount $0 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 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 utilizes grant-level management for 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. 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. In response to the auditor’s recommendations, the Department will: • Review internal controls and federal requirements related to SSBG reporting. • Develop and maintain a business process that would allow adjustments to include transaction level data. Completion Date: Estimated December 2025 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 306534

Finding 397448 (2023-071)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Questioned Costs Cash Management 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 cash draws for the Social Services Block Grant were properly supported. Questioned Costs: Assistance Listing # 93.667 Amount $1,504,566 Statu...

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure cash draws for the Social Services Block Grant were properly supported. Questioned Costs: Assistance Listing # 93.667 Amount $1,504,566 Status: Corrective action in progress Corrective Action: The Department maintains that funds were not improperly charged to the Social Service Block Grant (SSBG) program. This is a two-year grant that the Department spends down in one fiscal year. The expenditures drawn were allowable and within the period of performance and the one exception identified was due to the timing of expenditure transfers. The Department utilizes grant-level management for all federal funds, including the SSBG program. This process consists of making grant-level adjustments between allowable grant sources to properly spend grant dollars within the allowable period of performance and ensure level of effort and matching requirements 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. 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. In response to the auditor’s recommendations, the Department will develop and maintain a business process that would allow adjustments to include transaction level data. Completion Date: Estimated December 2025 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 306534 Questioned Costs: $1

Finding 397447 (2023-070)

Material Weakness 2023

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 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 $8,518,020 Status: Corrective action in progress Corrective Action: The Department maintains that funds were not improperly charged to the Social Services Block Grant (SSBG) program. The Department utilizes grant-level management for 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. Cost objectives within the accounting system are used to track SSBG funding. Expenditures eligible for the SSBG program are transferred at the cost objective level and not the transaction level. The SAO tested a sample of 16,006 payments which totaled 94% of total provider payments charged to the grant. SAO found that all payments were for activities that were supported, allowable, authorized, and accurate. SAO is questioning the costs of the remaining payments because the transfer of expenditures was not completed at the transaction level. Those remaining payments were transferred from eligible and allowable expenditures for the SSBG program. 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. In response to the auditor’s recommendations, the Department will develop and maintain a business process that would allow adjustments to include transaction level data. Completion Date: Agency Contact: Estimated December 2025 Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 306534 Questioned Costs: $1

Finding 397431 (2023-069)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Reporting Internal Control / Segregation of Duties

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

Finding: The Department of Children, Youth, and Families did not have adequate internal controls over reporting requirements for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department partially concurs with the finding. The Department acknowledges that errors were made in the crosswalks and quarterly reports submitted during the audit period. To address the auditor’s specific finding, the Department has: • Reviewed and updated all electronic versions of the quarterly crosswalks for accuracy. • Submitted corrections for the federal fiscal year 2023 Quarter 3 report. The conditions noted in this finding were previously reported in finding 2022-051. Completion Date: February 2024 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 306534

Finding 397430 (2023-068)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring Eligibility Internal Control / Segregation of Duties

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

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure group care facility employees and adults residing in prospective caregivers’ households had cleared background checks before having unsupervised access to children. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department partially concurs with the finding. The auditors identified two exceptions where fingerprint checks for two family foster home adults were completed two days later than the required timeline of 15 calendar days. The delay was due to the misspelling of one applicant’s last name in the system. Upon correction, the applicants subsequently completed the fingerprint checks and were determined eligible. As stated in the finding’s Cause of Condition, the Department developed a corrective action plan to address the internal control deficiencies in response to the prior year’s finding which had not been fully implemented within the current audit period. The Department is confident that all staff who work with children and youth have cleared background checks. As of April 1, 2023, the Department implemented a new process for processing background checks for group care facilities to strengthen internal controls, documentation, and clarification on the “effective date.” The updated process is outlined below: • A new form was created with clear instructions for the group care facilities to provide the applicant/employee information, including the background check confirmation code, directly to the Department’s Background Check Unit (BCU). • The BCU works with the applicant/employee through the fingerprint background check process. • The results are sent directly to the BCU, at which time they complete a child abuse/neglect history check and if needed a suitability assessment. The BCU documents the results in FamLink with the date the background check is completed. • The BCU emails the results to the group care facility and the Department’s Licensing Division (LD) group. If the applicant/employee is cleared and is not a renewal, LD staff adds the applicant/employee to the group care facility in FamLink with the clearance information attached. The conditions noted in this finding were previously reported in finding 2022-050. Completion Date: April 2023 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 306534

Finding 397429 (2023-067)

Significant Deficiency 2023

State of Washington C/o Office of Financial Management

WA

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

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

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure monthly foster care maintenance payments to children’s caregivers were adequate and accurate for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action in progress Corrective Action: The Department is committed to strengthening internal controls and complying with grant requirements. As stated in the finding’s Cause of Condition, the Department utilizes FamLink as the case management system for the Foster Care program which, due to system limitations, did not have the reporting capabilities to track rate setting reviews during the audit period. To assist with tracking rate setting requirements, the Department: • Created a new report in FamLink to assist rate assessors in identifying six-month reviews that have not been performed timely. • Implemented monthly tracking by supervisors to assist with internal controls and compliance. In response to the auditor’s recommendations and to assist in compliance, the Department has submitted a request to the technical team for an update to the report to also show when the next rate assessment is due. Completion Date: Estimated June 2024 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 306534

Finding 397428 (2023-066)

Significant Deficiency 2023

State of Washington C/o Office of Financial Management

WA

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

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

Finding: The Department of Children, Youth, and Families did not have adequate internal controls to ensure payments to providers for travel and family visits were allowable and adequately supported for the Foster Care program. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department is committed to strengthening internal controls and complying with grant requirements. As stated in the finding’s Cause of Condition, the Department was unable to fully implement the prior corrective action plan during the audit period. In April 2023, the Fiscal Integrity Unit collaborated with other divisions to implement the following internal controls: • Utilized algorithms in the Sprout system to identify reimbursement requests outside of a reasonable amount. • Required providers to submit additional documentation or explanation for those identified amounts. • Implemented a re-run process for prior billing periods to eliminate potential double billings by providers. • Trained headquarters and field office accounting staff to utilize the new algorithms and review additional documentation prior to processing payments. • Required program staff review and approval of all vendor invoices prior to release of payment for the Eastern Washington regions. In January 2024, the Fiscal Integrity Unit identified and implemented regional program approvals for Western Washington providers. The Contracts office has also taken the following actions: • In August 2023, filled one vacant staff position dedicated to reviewing child welfare contracts to include family time visit payments. • In November 2023, developed compliance audit plans for child welfare contracts and began fiscal monitoring of family time visit payments. • In December 2023, filled an additional vacant staff position dedicated to reviewing child welfare contracts. The conditions noted in this finding were previously reported in findings 2022-048 and 2021-040. Completion Date: January 2024 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 306534

Finding 397427 (2023-065)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

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

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

Finding: The Department of Children, Youth, and Families did not have adequate controls over and did not comply with certain requirements of its Public Assistance Cost Allocation Plan. Questioned Costs: Assistance Listing # 93.658 93.658 COVID-19 Status: Corrective action complete Corrective Action: The Department concurs with the finding and is committed to improving internal controls. The Department did not have adequate staffing levels to maintain the business processes for one monthly workbook for the Public Assistance Cost Allocation Plan. The Department was not able to complete the September 2022 workbook for cost base 100 (administrative charges) due to competing state and federal fiscal year close deadlines. Available staff were focused on grant reconciliations and closing out the prior fiscal year financial transactions. The Department has reviewed the base edit form written procedures with staff and added monthly reminders for the Cost Allocation and Grants Management Unit. In addition, the Department has confirmed that all cost base 100 workbooks have been properly completed for the state fiscal year 2024. The conditions noted in this finding were previously reported in finding 2022-047. Completion Date: March 2024 Agency Contact: Stefanie Niemela Audit Liaison PO Box 40970 Olympia, WA 98504-0970 (360) 725-4402 stefanie.niemela@dcyf.wa.gov

View Audit 306534

Finding 397423 (2023-057)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform risk assessments and monitor subrecipients of the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 ...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with requirements to perform risk assessments and monitor subrecipients of the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department has two programs that administer and award Low-Income Home Energy Assistance Program (LIHEAP) funds: the Energy Assistance program and the Weatherization program. There were no issues identified with the Energy Assistance program. The Weatherization program has improved its risk assessment process to include the following: • Provided proper training and development to new program staff to ensure risk assessments are completed on time. • Expanded the list of approvers for all steps within the risk assessment process, including supervisors, to demonstrate a thorough review process is in place. The Weatherization program has improved the monitoring process by incorporating the following: • Perform monitoring visits of all subrecipients per federal requirements two times per year instead of one. • Complete a full review and assessment of the monitoring process by the Compliance Manager and monitoring team. • Update all monitoring related forms, tools, and protocols to ensure accuracy, consistency, and completeness. The updated protocols will be in place in program year 2024. • Maintain an expanded list of approvers, including supervisors, for all steps within the monitoring process. • Continue to monitor all subrecipients at a level that exceeds federal program requirements of 5% of completed units. • Create a plan for addressing the monitoring frequency of high-risk subrecipients. • Monitor all associated funding sources to ensure compliance with program rules. • Utilize our data system and monitoring activities to evaluate the objectives for monitoring LIHEAP funds in the Weatherization program. Completion Date: January 2024 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 306534

Finding 397422 (2023-056)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subawards for the Low-Income Home Energy Assistance Program contained the federal award identification elements. Questioned Costs: Assistance Listing # 93.568 93...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with federal requirements to ensure subawards for the Low-Income Home Energy Assistance Program contained the federal award identification elements. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Department has two programs that administer and award Low-Income Home Energy Assistance Program (LIHEAP) funds: the Energy Assistance program and the Weatherization program. The Energy Assistance program created a plan to improve the documentation and communication regarding required federal award identification elements to ensure compliance with 2 CFR 200.332, which outlines requirements for pass-through entities. For all contracts: • The Federal Award Identification Number (FAIN) will be included on the face sheet, information sheet, and section one in each contract. This will eliminate errors resulting from multiple federal awards being issued from a single contract. • The information will be entered by the LIHEAP Commerce Specialist and reviewed by the LIHEAP Program Manager and the Community and Economic Opportunities Managing Director prior to execution of each contract. The Weatherization program will also follow this process to correct similar deficiencies reported by the auditors. In the spring of 2023, the Department instituted an agency-wide process to comply with the Requirements for Pass Through Entities in 2 CFR 200.332. A template is completed and provided to all federal subrecipients at the time the subaward is issued. The agency requirements were also communicated through our Daily Digest Communication, once in 2022 and again in 2023. Additionally, the Internal Control Officer has worked with program staff to familiarize them with the requirements and process. Completion Date: December 2023 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 306534

Finding 397421 (2023-055)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with reporting requirements for the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action complete Co...

Finding: The Department of Commerce did not have adequate internal controls over and did not comply with reporting requirements for the Low-Income Home Energy Assistance Program. Questioned Costs: Assistance Listing # 93.568 93.568 COVID-19 Amount $0 Status: Corrective action complete Corrective Action: The Low-Income Home Energy Assistance Program (LIHEAP) utilized a reporting process that was audited as part of the fiscal year 2023 audit. The LIHEAP program has the following process: • The program manager prepares the necessary reports. • The managing director reviews reports before submittal. • The program manager submits reports once the managing director’s approval is received. • The program manager receives notice that the report has been accepted by the grantor. • The program manager saves a copy of the report, documentation and the report submission acceptance from the grantor. To address the deficiencies reported by the auditors, program management implemented additional steps into their reporting process: • The LIHEAP program manager retains all data reports from the LIHEAP data system used for reporting. • LIHEAP information technology staff save a snapshot of the entire database from the date of the report. This allows point-in-time reporting information to be retained as audit support documentation and for audit support. • The managing director sends written/email approval to the program manager for reports reviewed. • The program manager retains written approvals as audit support documentation and for audit support. Following the auditors’ recommendations, the LIHEAP program submitted updated Grantee Survey and Household Reports, which were accepted by the grantor’s awarding portal. The conditions noted in this finding were previously reported in findings 2022-039 and 2021-032. Completion Date: March 2024 Agency Contact: Gena Allen, CFE Internal Control Officer PO Box 42525 Olympia, WA 98504-2525 (360) 480-5149 Gena.Allen@Commerce.wa.gov

View Audit 306534

Finding 397417 (2023-054)

Material Weakness 2023

State of Washington C/o Office of Financial Management

WA

Subrecipient Monitoring

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

Finding: The Department of Social and Health Services did not have adequate internal controls over and did not comply with federal requirements to perform fiscal and program monitoring of subrecipients for the Refugee and Entrant Assistance programs. Questioned Costs: Assistance Listing # 93.566 Amount $0 Status: Corrective action in progress Corrective Action: The Department concurs with the finding. In response to a prior audit finding, the Department’s Office of Refugee and Immigrant Assistance (ORIA) developed a subrecipient versus contractor determination tool. However, this tool was not formalized until April 2023, and implementation and training occurred in April through June 2023. The Department is taking action to strengthen internal controls over subrecipient monitoring for ORIA’s contracts. By July 2024, the Department will: • Complete a review of all active contracts utilizing federal funding to ensure subrecipients are accurately identified. • Explore the feasibility of increasing ORIA and Economic Services Administration accounting staff resources to support the workload increase associated with monitoring subrecipients. By October 2024, the Department will convene a work group with contracts and accounting staff to create effective internal controls and written procedures for fiscal and program monitoring of ORIA’s subrecipient contracts. This will include the following: • Verify the subrecipient status for each contract is correctly determined and recorded in the Agency Contracts Database. • Include the required subrecipient language in the contract. • Obtain a copy of the indirect rate certification or cost allocation plan from the subrecipient. • Complete risk assessments. • Create appropriate monitoring plans for each subrecipient. • Conduct fiscal monitoring of each subrecipient to obtain assurance that the use of federal funds complies with federal laws and regulations. • Create corrective action plans when required. By January 2025, the Department will ensure all ORIA program staff responsible for monitoring receive training on the updated procedures. Completion Date: Estimated January 2025 Agency Contact: Richard Meyer External Audit Compliance Manager PO Box 45804 Olympia, WA 98504-5804 (360) 664-6027 Richard.Meyer@dshs.wa.gov

View Audit 306534

Corrective Action Plans

Filters