The City looks forward to the annual audit and appreciates the relationship with the local audit team and the Washington State Auditor’s Office. We regularly reach out to seek guidance and are quick to implement any recommendations from the office. However, we disagree with both the basis of the f...
The City looks forward to the annual audit and appreciates the relationship with the local audit team and the Washington State Auditor’s Office. We regularly reach out to seek guidance and are quick to implement any recommendations from the office. However, we disagree with both the basis of the finding and the statement that “The City does not have adequate controls for ensuring compliance with federal suspension and debarment requirements.”
As a Non-Entitlement Unit, the City was eligible for and elected to use the “Revenue Loss” category as an eligible use of the funding. Throughout all the materials released by the federal government related to eligible uses and compliance, there were references to the revenue loss eligibility category “providing recipients with broad latitude to use funds for the provision of government services to the extent of reduction in revenue due to the pandemic.” Furthermore, the SLFRF Compliance and Reporting Guidance explicitly states, “For recipients electing the “Standard Allowance,” Treasury will presume that up to $10 million, not to exceed the award allocation, in revenue has been lost due to the public health emergency. Recipients are permitted to use that amount to fund “government services.” This use option and guidance was in direct contrast to all other use options that required more cumbersome compliance requirements typically associated with federal grants. The revenue loss option was clearly recognizing the impact that the cumbersome compliance requirements would have on smaller entities and stated that it was to “ease the administrative burden”. As stated above, if you elected the standard allowance, Treasury will PRESUME that up to $10m, not to exceed the award allocation, in revenue has been lost due to the public health emergency and recipients are permitted to use that amount to fund “governmental services”. Why have an eligible use category of revenue loss with the presumption and understanding that it’s for governmental services yet have compliance requirements that completely undermine the category? At the time the city incurred the expenditures in question they were for the procurement of governmental service and it was not known which of these services would be categorized as federal under the revenue loss eligible use option. In fact, one of the expenses in question was a contracted payment that was entered into in a prior year for governmental services, specifically public safety. It is important to note that neither of the vendors who were paid were suspended nor debarred.
The city also strongly disagrees with the statement that “The City did not have adequate controls for ensuring compliance with federal suspension and debarment requirements.” The city has excellent internal controls as it was able to demonstrate during the auditor review of other federally funded programs.
The guidance that was issued with the funding was painstakingly read and reviewed and funding was spent per the guidance. We believe the interpretation and application of the guidance by the State Auditor’s Office for Non-Entitlement Units as it relates to the revenue loss option is incomplete and incorrect.
Despite this disagreement, the city will continue to comply with federal funding requirements related to suspension and debarment.